EEPOET 


TO 


Hon.  James    W,  ReA,  President 

Hon.  J.  M.  Litchfield 
Hon.  William  Beckman 

Railroad  Commissioner, 


BY 

RICHARD    PRICE    MORGAN 

UPON 

WHAT  WOULD  BE  JUST  AND  EQUITABLE 

RATES  OF  FREIGHTS  AND  FARES  FOR 

THE  RAILROADS  OF  CALIFORNIA 


NPVKMBBK,  im-i 

>     1  3 


^. 


REPORT 


TO 


Hon.  James  W.  Rea,  Presideint 
Hon.  J.  M.  Litchfield 
Hon.  William  Beckman 

Railroad  Commissioners 

BY 

EICHARD    PRICE    M0RGA:N^ 

UPON 

WHAT  WOULD  BE  JUST  AND  EQUITABLE 

RATES  OF  FREIGHTS  AND  FARES  FOR 

THE  RAILROADS  OF  CALIFORNIA 


NOVEMBER,  1892 


INDEX 


PAO-K 

Correspondence,  instructions,  method  of  proceeding  and  investigations 

made 5,6 

General  remarks 6-9 

Physical  characteristics  of  California 9,  10 

Hailroad  mountain  grades 10 

Pennsylvania  Central  Railroad 10,  1 1 

California  railroads 1 1-17 

Tunnels 15 

Snowsheds    15,  16 

Ferries 16 

Railway  termini  at  San  Francisco 17 

Illinois,  its  railways  and  surrounding  States 17-19 

Volume  of  business 19 

Equal  rates  impracticable 19 

Value  of  the  comparisons  of  figures 20 

Rates  in  California 20,  21 

The  Commission  prohibited  from  anticipating  very  rapid  development .  21,  22 

The  development  of  agriculture  arid  other  industries  in  California 22,  23 

Large  land-holdings 23,  24 

The  foothiUs 24 

Irrigation 24,  25 

Physical  characteristics  of  the  States  and  Territories  surrounding  Cali- 
fornia          25 

California  an  exceptional  State 25 

The  construction  and  maintenance  of  the  railways 25,  26 

Character  of  accommodation  and  service 26 

Freight  rates  transposed 26 


PAGB 

Factors  affecting  the  operation  of  roads 27 

Bates  of   Pennsylvania   Kailroad  compared   with  rates   of   Southern 

Pacific  Company 27,  28 

Ferry  and  suburban  rates  of  the  Southern  Pacific  C!ompany  compared 

with  others 28,  29 

Comparison  of  the  rates  of  the  California  Southern  and   Atlantic  & 

Pacific  roads  (Santa  F^)  with  the  Pennsylvania  Railroad 29,  30 

Comparison  of  the  rates  of  other  roads  in  Pennsylvania  with  California 

roads,  and  with  the  rates  in  Massachusetts  and  Illinois 30,  31 

Comparison  with  California  of  the  density  of  population   and  increase 

in  nine  States 31,32 

The  railroads  of  California  extend  throughout  its  great  and  sparsely 

occupied  territory 32 

Grain  rates. — The  cost  to  the  farmers  of  California  a  small  fraction 
over  one  and  a  half  cents  per  bushel  greater  than  to  the  farmers 
of  Kansas  and  other  States 32,  33 

Nearly  all  of  the  railroad  companies  in  Kansas  bankrupt ,  and  the  con- 
struction of  railroads  absolutely  stopped 33 

The  comparative  cost  of  fuel,  and  the  importance  of  this  factor 33-35 

Low  transcontinental  rates  for  certain  products  to  Eastern  markets 3C-40 

Rates  for  the  transportation  of  persons  and  property  from  10  per  cent 
to  20  per  cent  higher  than  in  other  States,  justified  in  California 
by  the  excess  in  cost  of  fuel  alone 40 

Conclusions 41-43 

Opinion  of  President  C.  L.  Taylor,  of  the  Chamber  of  Commerce  of 

San  Francisco 43 


r 


EEPORT. 


San  Francisco,  Nov.  14th,  1892. 

Hon.  James  W.  Rea,  President, 
Hon.  J.  M.  Litchfield, 
Hon.  William  Beckman, 

Railroad  Commissioners  for  the  State  of  California  : 
Gentlemen  :  In  conformity  with  our  correspondence 
and  the  resolution  unanimously  adopted  by  your  Board 
(Appendix  "A"  ),  I  present  the  following  considerations 
and  report  in  respect  to  "  What  would  be  just  and  equit- 
able rates  of  freights  and  fares,  taking  into  account 
operating  expenses  and  all  other  matters  of  general  import 
bearing  thereon  and  affecting  the  operations  of  railroads 


jsin  this  State?" 

CO 


^     A  report  possessing  the  elements  essential  to   reason- 
"ably  accurate  conclusions  could  not  be  prepared  without 
ithe  aid  of  data  acquired  by  personal  observation,  invest- 
iigation  and  knowledge  of  the  physical  conditions  affect- 
:ing   the    roads,    and  also   of    their   business   resources, 
; present    and     prospective;    I    therefc>re    asked    for    and 
received   from    you    a   letter  (Appendix    "B")  to  each 
railroad   manager  in  the  State,  twenty-three  in  all,  con- 
ferring upon  me  the  authority  of  the  Commission  to  ask 
the  railroad   companies  for  transportation  and    informa- 
tion   in   respect    to     their  rates    and    fares,     operating 
expenses,  etc. 

Under  this  authority  I  have  personally  examined  their 
properties,  and,  so  far  as  feasible  in  the  time  allotted, 
carefully  investigated  the  rates  and  fares  and  the  condi- 

29902.5 


6 

tions  affecting  the  operation  of  practically  all  of  the 
railroads  in  the  State.  The  managers,  without  exception, 
have  given  me  courteous  and  valuable  assistance. 

I  have  also  personally  traversed  all  of  the  principal 
water  lines  of  transit  :  the  Sacramento  and  San  Joaquin 
rivers,  the  bay  steamer  lines  and  the  coast  steamer  lines. 
From  these  sources  much  interesting  and  valuable 
information  in  respect  to  the  transportation  facilities  of 
the  State  has  been  obtained. 

General    Remarks. 

In  the  preparation  of  such  a  report  as  you  have 
requested  me  to  make,  the  data  are  so  very  numerous  and 
extensive,  that  to  enable  a  clear  consideration  of  them  as 
much  method  will  be  adopted  in  their  presentation  as 
practicable.  Extreme  minutia?  and  useless  precision 
will  be  avoided,  as  well  as  statements  too  comprehensive, 
neither  of  which  it  is  believed  would  serve  to  elucidate 
the  questions.  The  report  has  been  prepared  under  a 
full  impression  of  the  complex  character  of  the  subject, 
of  the  importance  of  accurate  conclusions,  and  of  the 
truth  of  the  considerations  on  which  it  is  founded. 

It  is  also  proper  for  me  to  state  for  your  information, 
that  in  making  professional  estimates  from  time  to  time 
during  a  considerable  period  of  years,  for  European  and 
American  capital,  of  the  safe  net  earning  capacity  of 
railways  on  the  Pacific  Coast,  it  has  been  necessary  for 
me  to  study  the  physical  characteristics  and  resources  of 
the  State  of  California  and  of  the  adjacent  States;  also 
the  immediate  and  prospective  gross  earnings,  and  the 
cost  of  02)erating  and  maintaining  its  railways.  In  like 
manner,  and  for  the  same  and  similar  purposes,  I  have 
examined  into  and  reported  on   many  other  systems  of 


railways  in  the  United  States,  which  in  varying  degrees 
are  analogous  in  some  of  their  conditions  to  the  railroads 
in  California,  and  again  others  which  are  merely  similar. 

For  this  report,  in  addition  to  the  information  acquired 
of  the  roads  under  consideration,  as  full  and  just  com- 
parisons as  needful  and  feasible  have  been  made  with 
other  roads  and  systems,  but  none  have  been  found 
which  are  really  analogous  in  many  of  their  conditions 
to  those  in  California.  The  latest  and  highest  authori- 
ties on  essential  matters  have  been  carefully  studied, 
and  it  has  been  my  endeavor  to  make  accurate  use  of 
them,  and  also  of  every  available  fact  or  factor  leading  to 
sound  conclusions. 

In  comparing  physical  conditions  and  rates,  especial 
care  has  been  exercised  to  do  so  in  sufficient  detail ;  also, 
as  far  as  practicable,  the  varying  conditions  affecting 
them  are  presented  so  that  the  comparisons  may  be 
fairly  conclusive  and  satisfactory,  not  harmful  and  mis- 
leading, as  comparisons  of  the  mere  figures  of  rates  nec- 
essarily are.  It  seems  clear  that  the  best  method  by 
which  the  reasonableness  of  the  railroad  rates  of  the 
State  can  be  properly  determined  is  mainly  by  fair,  just 
and  equitable  comparisons,  taking  into  account  all  con- 
ditions which  affect  them.  Much  light  can  be  obtained 
too  from  the  rates  and  conditions,  past  and  present,  in 
the  United  States  at  large,  in  the  States  separately,  and 
also  the  rates  and  conditions  of  individual  railways  can 
be  usefully  employed. 

It  will  not  be  contended  that  the  rates  in  the  country 
at  large,  for  the  transportation  of  persons  and  property 
by  rail,  are  as  a  whole  unreasonably  high  and  inequita- 
ble ;  but,  on  the  contrary,  those  who  are  familiar  with 
the  history  of  railway  construction  and  transportation 
will  readily   remember,   that  continuously  since  the  era 


of  railways  began,  the  highest  intelligence  and  patriot- 
ism of  the  people  of  the  United  States  have  been  strenu- 
ously engaged  to  establish  reasonable  and  equitable 
relations  in  this  respect  between  themselves  and  the 
railways,  and  that  in  a  remarkable  degree  those  highly 
beneficial  relations  have  been  adjusted  from  time  to  time, 
as  the  conditions  have  changed.  It  is  generally  con- 
ceded that  the  rates  are  now  in  many  States  as  perma- 
nently established  as  practicable.  In  addition  to  all  of 
the  elements  of  the  cost  of  transportation,  the  irregu- 
larities of  trafiSc  on  the  different  roads,  the  fluctuation 
of  the  prices  of  the  markets,  home  and  foreign,  the 
changing  conditions  of  the  country  and  of  its  finance 
and  commerce,  properly  exercise  strong  influence  in  de- 
termining the  question  of  rates. 

If  hitherto  in  the  process  of  adjustment,  at  times  when 
there  were  none  and  few  precedents,  the  people  have  in 
many  cases  suffered  injustice,  it  is  equally  true  that  in 
many  instances  the  railroad  companies  have  also  been 
inequitably  treated.  These  results  on  either  side  were 
not  as  a  rule  brought  about  viciously,  but  arose  from  new 
and  untried  conditions  and  a  manifestation  of  power  so 
marvelous  in  its  beneficent  results  as  to  greatly  excite  the 
people  and  the  railroad  companies,  its  beneficiaries. 
But  the  precedents  now  existing  in  the  older  States,  and 
the  information  obtained  by  the  States  and  general 
Government,  throw  so  much  light  upon  the  question  of 
railway  rates,  that  intelligent  and  careful  investigation 
should  prevent  serious  injustice  or  inequity  being  done 
to  the  people  or  the  railway  companies  in  the  develop- 
ment of  comparatively  new  States.  It  is  believed,  there- 
fore, that  if  the  principal  factors,  which  are  at  this  time 
available,  are  fairly  taken  into  account  in  considering 
the  railway  problem  of  this  State,  the  conclusions  ought 


9 

to  be  measurably  fair  and  satisfactory,  but  of  course 
requiring  adjustment  from  time  to  time  to  properly  meet 
changing  conditions. 

Physical  Characteristics  of  California. 

California  embraces  two  very  grand  valleys,  the  San 
Joaquin  and  Sacramento  ;  also  numerous  lesser  valleys 
and  ocean  table-lands,  all  of  marvelous  productiveness. 
They  are  surrounded  within  the  limits  of  the  State  by 
vast  and  lofty  mountain  ranges  ;  broad  zones  of  arable 
foothills  rise  from  the  valleys  and  table-lands  to  the  line 
of  unproductive  altitude  on  the  mountain  sides.  In  the 
southeasterly  portion  of  the  State  there  is  an  arid  region 
of  comparatively  great  magnitude.  San  Francisco  bay, 
about  equidistant  from  the  north  and  south  boundary 
of  the  State,  is  the  entrepot  for  commercial  exchanges 
with  the  world,  and  it  may  be  truly  said  that  the  ample 
area  and  great  perfection  of  this  harbor  indicate  with 
precision  what  the  marine  and  interstate  commerce  will 
require  of  it  in  the  future. 

The  State  has  156,000  square  miles,  which  have  been 
classed  as  follows,  and  it  is  doubtless  exact  enough  for 
the  purposes  of  this  report : 

SQ.  MILES. 

Valleys 39,000 

Mountains 82,000 

Desert 35,000 

It  is  safe  to  say  that  no  State  in  the  Union,  possibly 
excepting  Colorado,  which  invites  their  construction, 
presents  within  itself  and  pervading  the  State,  conditions 
so  complex,  formidable  and  arbitrary  to  the  construction 
and  successful  operation  of  railways  as  those  of  Califor- 
nia, and,  at  the  present  time,  of  the  4,400  miles  of  road 
operated  within  the  State,  little  or  no  traffic  arises  on 
nearly  20,%  of  that  mileage. 


10 

For  convenience  in  the  further  consideration  of  the 
question,  reference  is  made  to  Appendix  "  D,"  which 
presents  a  comparison  of  the  local  rates  charged  for  the 
leading  articles  transported  by  the  railroads  of  Califor- 
nia. A  cursory  examination  of  these  tables,  and  all 
other  schedules  of  rates  in  this  State  exhibited  in  this 
report,  will  readily  disclose  marked  differences  in  the 
rates  charged,  perhaps  equal  to  the  diverse  conditions 
under  which  each  road  is  operated  ;  but,  if  those  condi- 
tions are  well  understood,  the  apparent  want  of  uniform- 
ity and  seeming  inequity  in  the  rates  becomes  less  real, 
and  the  question  of  their  reasonableness  is  naturally 
held  in  abeyance  by  the  mind  for  more  complete  infor- 
mation and  analysis. 

Mountain  Grades. 

Superficial  observation  fails  to  realize  even  an  approx- 
imation of  the  extraordinary  difficulties  affecting  the 
construction,  operation  and  maintenance  of  the  railways 
of  California,  but,  as  already  suggested,  very  critical 
analyses  of  those  difficulties  and  of  the  cost  of  operating 
the  roads  are  not  believed  to  be  essential  to  this  report. 

Accompanying  the  following  descriptive  comparison 
of  the  grades  of  the  roads  in  this  State  with  those  in 
other  States,  illustrative  profiles  will  be  found  in  Ap- 
pendix "E." 

Pennsylvania  Central  Railroad. 

The  Allegheny  mountain  grades  of  the  Pennsylvania 
Central  Railroad  are  between  Johnstown  on  the  west 
and  Altoona  on  the  east.  They  are  quite  familiar  to 
travelers  and  well  known  by  civil  engineers  and  railway 
managers.  From  Johnstown  easterly  to  the  summit  of 
the   range,   a  distance  of  27  miles,  the  total  rise  is  981 


11 

feet,  and  tlie  grade  averages  36  feet  per  mile.  From 
Altoona  wester]}^  to  the  summit,  a  distance  of  12  miles, 
the  total  rise  is  984  feet,  the  grade  averaging  82  feet  per 
mile,  giving  an  aggregate  rise  over  the  mountain  east 
and  west  of  1,965  feet  in  a  total  distance  of  39  miles,  the 
average  of  the  grades  being  50  feet  per  mile.  All  parts 
of  the  mountain  line  of  the  Pennsylvania  Central  receive 
large  local  business,  and  for  the  maintenance  and  for 
operating  the  road,  abundance  of  excellent  timber,  stone 
suitable  for  masonry  and  ballasting,  cross-ties,  wood  and 
coal  are  delivered  at  low  cost  from  the  forest,  quarries 
and  mines  adjacent  to  the  line.  As  a  rule,  precisely  the 
opposite  of  these  economic  conditions  exist  on  the  moun- 
tain lines,  and  also  in  a  measurable  degree  on  all  parts 
of  the  railways,  of  California,  also  the  mountain  grades 
which  they  have  to  contend  with  are  very  greatly  more 
difficult. 

For  greater  convenience,  and  to  avoid  repetition,  and 
also  because  it  has  sufficient  length  for  comparisons  and 
is  the  most  extensive  and  important  system  in  California 
and  in  the  adjacent  States,  the  roads,  conditions  and 
rates  of  the  Southern  Pacific  Company  will  be  made  the 
principal  basis  for  comparisons  with  the  other  railroads 
in  California  and  elsewhere. 

CALIFORNIA   RAILROADS. 

Southern  Pacific  System, 

The  total  rise  of  the  strictly  mountain  grades  of  the 
main  lines  of  the  Southern  Pacific  Company,  within  the 
limits  of  California,  north,  east,  south  and  west,  is 
30,556  feet  in  a  distance  of  515  miles,  making  an  aver- 
age grade  of  fifty-nine   feet   per  mile.     In  other  words 


12 

there  is  thirteen  times  the  horizontal  length  of  grade, 
and  fifteen  times  the  vertical  rise,  that  the  Pennsylvania 
Central  Railroad  encounters  in  crossing  the  Allegheny 
mountains,  which  have  long  been  considered  in  connec- 
tion with  railway  construction  and  transportation  as  the 
"great  barrier"  between  the  Atlantic  seaboard  and  the 
Mississippi  valley. 

In  addition  to  the  foregoing,  the  Southern  Pacific 
Company's  lines,  extending  outside  of  California,  and 
connecting  adjoining  States,  have  mountain  grades  which 
aggregate  10,818  feet  in  a  distance  of  192  miles,  or  an 
average  grade  of  56  feet  per  mile.  On  the  main  lines  of 
the  system  of  the  Southern  Pacific  Company,  west  of  El 
Paso,  the  mountain  grades  aggregate  a  distance  of  707 
miles,  and  a  total  rise  of  41,373  feet,  the  grades  averaging 
58.5  feet  per  mile,  about  8  feet  per  mile  greater  than  the 
average  of  the  Pennsylvania  Central  Railroad  in  cross- 
ing the  Allegheny  mountains. 

Comparing  the  mountain  grades  of  these  systems,  the 
total  rise  of  the  roads  of  the  Southern  Pacific  Company 
is  twenty-one  times  greater,  and  the  horizontal  distance 
eighteen  times  greater,  than  on  the  Pennsylvania  Central 
Railroad. 

The  Santa  Fe  system,  on  its  extension  through  adjoin- 
ing States  and  in  Southern  California,  the  Carson  & 
Colorado,  the  Nevada,  California  &  Oregon,  and  also 
other  roads  in  California,  have,  in  proportion  to  their 
length,  to  overcome  mountain  grades  equal  to  those  en- 
countered by  the  lines  of  the  Southern  Pacific  System. 
The  profiles,  which  are  a  part  of  this  report,  will  illus- 
trate this  fact. 

If  the  railways,  which  are  within  the  limits  of  the  San 
Joaquin  and  Sacramento   and  smaller  valleys,  and  also 


13 

on  the  ocean  table-lands,  could  be  considered  by  them- 
selves, and  their  rates  established  by  adopting  the  figures 
of  the  passenger  and  freight  tariffs  of  some  other  State, 
solely  because  the  surface  of  that  State,  and  those  of  the 
valleys  and  table-lands  of  California,  are  similar  ;  and  if 
the  extensions  of  the  railways  north,  east,  south  and 
west,  over  the  great  mountain  ranges  and  across  the 
broad  mountainous  arid  regions,  which  encompass  the 
State,  could  be  disregarded,  and  the  railways  in  the  val- 
leys and  on  the  table-lands  could  be  separated  from  the 
systems  of  which  they  are  integral  parts, — it  would 
greatly  simplify  the  problem  of  rate-making. 

But  it  surely  must  be  manifest  to  every  intelligent  and 
unbiased  mind,  at  all  familiar  with  the  practical  opera- 
tions of  railways,  and  the  conditions  affecting  these,  that 
rates  so  established  would  furnish  no  sufficient  basis  to 
justify  any  opinion  as  to  the  reasonableness  of  the  pres- 
ent rates  on  these  lines.  If  their  extensions  were  discon- 
tinued and  they  were  cut  off,  and  their  termini  were 
permanently  established  at  the  bases  of  the  foothills  of 
the  surrounding  mountains,  lower  rates  to  tide-water 
could  doubtless  be  easily  made  by  such  mere  comparisons 
as  has  been  suggested ;  but  it  is  more  than  probable  that 
for  many  good  reasons  they  would  be  found  to  be  unrea- 
sonably low,  and  that  they  would  have  to  be  increased 
and  made  higher  than  those  now  existing,  to  become 
reasonable  and  sufficient  to  operate  and  completely  main- 
tain the  roads.  Under  such  conditions  they  would  fur- 
nish to  the  people  of  California  but  a  tithe  of  the 
facilities  and  benefits  now  enjoyed.  This  statement  is 
upheld  by  facts  and  the  practical  opinions  of  financiers 
and  business  men,  forcibly  expressed  by  their  acts.  More 
than  two  hundred  railroad  companies  have  been  incor- 


14 

porated  to  construct  railways  in  the  areas  spoken  of, 
and  it  cannot  be  doubted  that,  mainly  for  the  reasons 
briefly  presented,  but  few  of  them  have  been  built.  The 
field  is  still  open ;  railroads  can  be  built  and  equipped  at 
comparatively  low  cost,  because  money,  labor  and  the 
materials  that  enter  into  their  construction  are  much 
cheaper  than  ever  before  in  this  country.  The  true  reason 
why  many  of  those  contemplated  have  not  been  built,  is 
because  the  existing  railroads  and  the  water  transit,  by  the 
San  Joaquin  and  Sacramento  rivers  and  their  tributaries, 
the  bays  and  minor  inlets,  and  also  the  coastwise  ocean 
transit,  are  fully  equal  to  the  demand,  and  provide  op- 
portunity for  healthy  competition.  It  is  a  fact  of  great 
importance  that  about  75  per  cent  of  the  local  commerce 
of  California  possesses  all  the  advantages  that  free-water 
lines  of  transit  confer.  This  competitive  force  is  exerted 
not  for  six  or  eight  months  and  then  suspended  by  winter 
for  four  to  six  months,  as  it  is  in  all  of  the  States  east  of 
California  to  the  Atlantic  seaboard,  north  of  the  39th 
parallel  of  latitude  ;  but,  on  the  contrary,  its  influence  is 
continuous  every  day  in  each  year.  Branch  railroads 
and  extensions  have  been  and  are  being  constructed  by 
several  of  the  railroad  companies  of  the  State,  doubtless 
fully  as  fast  as  justifiable  ;  but  these  branches  are  prob- 
ably sustained  as  auxiliary  lines,  and  by  the  application 
to  them  of  the  principle  of  constructive  mileage,  or  its 
equivalent,  also  by  the  economy  of  consolidation,  and 
not  by  the  excessively  high  rates  which  their  expenses 
and  maintenance  would  require  if  they  were  indepen- 
dent roads. 

In  this  connection,  reference  is  made  to  an  interesting 
and  highly  instructive  letter  from  Mr.  A.  N.Towne,  second 
vice-president  and  general  manager  of  the  Southern 
Pacific  Company,  which  will  be  found  in  Appendix  "C." 


15 

Tunnels. 

The  character  of  the  rock  in  which  the  tunnels  on  the 
lines  of  the  railways  in  California  are  constructed  is  such 
that  they  have  to  be  heavily  timbered  to  insure  the  safe 
I)assage  of  trains,  which  involves  greater  first  cost  and 
much  more  than  ordinary  expense  for  their  mainte- 
nance. 

On  the  roads  of  the  Southern  Pacific  Company  alone 
there  are  54,000  lineal  feet  of  tunneling,  about  six  times 
the  total  length  of  the  double-track  tunnels  of  the  Penn- 
sylvania Company,  including  its  Allegheny  summit  tun- 
nel of  3,612  feet. 

The  San  Francisco  &  North  Pacific  Railroad,  many 
parts  of  which  are  very  costly,  has  more  lineal  feet  of 
tunneling  than  the  Pennsylvania  Central  road,  pnd  it  also 
ascends  the  Russian  river  on  heavy  grades  and  sharp 
curvature.  The  same  conditions  also  exist  on  the  North 
Pacific  Coast  Railroad. 

Snowsheds. 

Although  there  is  nothing  of  the  kind  on  the  Penn- 
sylvania Central,  or  any  railroad  in  the  Mississippi  val- 
ley, with  which  to  compare  them,  it  should  be  stated  that 
on  the  Southern  Pacific  System  in  California  there  are 
175,000  lineal  feet  of  snowsheds,  about  170,000  feet  of 
which  (32  miles)  are  continuous  on  the  summit  of  the 
Sierra  Nevada  mountains,  where  the  annual  snowfall  is 
from  30  to  40  feet.  To  withstand  this  weight  of  snow, 
and  to  pass  the  avalanches,  to  which  they  are  subjected 
in  places,  safely  over  them,  the  sheds  are  principally 
constructed  of  heavy  timber  for  framework,  and  four- 
inch  plank  for  covering,  making  the  average  cost  not 
less  than  $45,000  per  mile.     The  maintenance  of  these 


16 

siiowsheds,  so  that  they  are  at  all  times  competent  for 
the  purpose  intended,  is  very  costly.  Not  only  the  effect 
of  snows,  avalanches  and  storms  in  winter,  and  ordinary 
decay,  have  to  be  met,  but  in  the  summer  season  there  is 
great  hazard  and  frequent  losses  by  fire. 

Note :  Since  writing  the  above,  4,800  feet  of  the  sheds 
have  burned,  involving  a  direct  loss  of  not  less  than 
$75,000.00,  and  indirectly  considerably  more. 

Ferries. 

Several  of  the  railways  of  the  State  approach  and  reach 
San  Francisco  under  conditions  more  than  ordinarily 
adverse  in  respect  to  the  current  cost  of  operating  them. 

Throughout  the  United  States,  for  the  purpose  of  over- 
coming the  excessive  current  expense  imposed  by  ferries, 
and  to  facilitate  the  operation  of  the  railways,  very  costly 
tunnels  and  bridges  have  been  constructed, — most  re- 
cently the  St.  Clair  tunnel  under  St.  Clair  river  and  the 
great  bridge  across  the  Mississippi  at  Memphis.  For  the 
same  economic  considerations,  bridges  and  timnels  of 
enormous  cost  are  being  constructed  across  the  East  and 
Hudson  rivers  at  New  York. 

The  main  line  of  the  Southern  Pacific  Company  is 
broken  by  the  straits  of  Carquinez,  across  which  an  expen- 
sive ferry  is  maintained  for  the  transfer  of  passenger  and 
freight  trains.  There  is  also  a  separate  ferry  from  Vallejo 
across  the  straits,  for  the  transfer  of  passengers  and  express 
matter.  As  soon  as  feasible,  no  doubt,  a  high  bridge 
w^ill  be  substituted  for  these  ferries. 

The  San  Francisco  &  North  Pacific  and  the  North 
Pacific  Coast  Railways  also  have  ferries  across  San  Fran- 
cisco bay. 


17 

Railway  Termini  at  San  Francisco. 

The  San  Francisco  terminus  of  tlie  Southern  Pacific 
System  is  subdivided  by  arbitrary  natural  conditions, 
and,  being  separated  by  the  bay  of  San  Francisco,  these 
subdivisions  are  practically  permanent  in  their  location, 
and  cannot  be  consolidated  for  convenience  and  economy. 
Those  exterior  to  San  Francisco  are  at  Oakland  and  Ala- 
meda, the  areas  necessary  for  them  being  largely  made 
by  the  construction  of  an  extensive  and  costly  mole  and 
piers,  which  are  projected  nearly  two  miles  into  the  bay. 
Connecting  its  exterior  subdivisions  with  those  in  the 
city  of  San  Francisco  is  a  costly  ferry  system  for  pas- 
sengers and  freight,  that  averages  more  than  four  miles 
in  length. 

The  San  Francisco  &  North  Pacific  Railway  Company 
and  the  North  Pacific  Coast  Railroad  Company  are 
subject  to  this  more  than  ordinary  expense  in  a  greater 
degree  proportionately  than  the  Southern  Pacific  Com- 
pany, because  their  termini  are  similarly  subdivided, 
their  ferries  are  longer  and  the  volume  of  traffic  of  each 
road  is  much  lighter. 

Further  explanation  will  not  be  necessary  to  sustain 
the  statement  that,  compared  generally  with  the  impor- 
tant railway  termini  in  the  United  States,  those  at  San 
Francisco  are  unusually  expensive  in  respect  to  mainte- 
nance and  operation. 

Illinois   and  Its  Railways. 

Illinois  has  long  been  known  as  the  Prairie  State,  its 
gently  undulating  surface  lying  quite  uniformly,  about 
600  feet  above  sea-level.  The  great  fertility  of  the  soil 
throughout  its  length  and  breadth,  and  its  numerous 
other  natural  advantages,  caused  Abraliam  Lincoln  to 
say,  "  I   have  no  doubt  that  the  Almighty  might  have 


18 

made  a  better  State  than  Illinois,  but  I  know  He  never 
did."  These  conditions  and  liberal  local  aid  stimulated 
the  building  of  railways  to  an  unusual  degree,  and,  as 
soon  as  the  construction  of  them  was  begun,  all  of  the 
Government  lands  were  literally  seized  upon,  mostly  by 
actual  settlers  for  comparatively  small  farms.  The  prices 
for  the  land  were  as  a  rule  $1.25  per  acre,  and  within 
the  land  grant  of  the  Illinois  Central  Railroad  Company 
a  double  minimum  price  of  $2.50  per  acre  was  paid  to 
the  Government.  All  of  the  conditions  presented  the 
highest  known  inducements  for  the  rapid  construction 
of  railroads  and  the  establishment  of  varied  industries 
by  the  people. 

The  Mississippi  river  on  its  westerly  boundary,  the 
Ohio  on  the  southeasterly,  the  Illinois  passing  nearly 
through  it  diagonally,  the  Canal  extension  to  Chicago  at 
the  head  of  the  great  chain  of  lakes,  the  lake  harbors 
and  10,000  miles  of  railway,  now  provide  for  the  people 
of  that  State  (having  but  one-third  the  area  of  California) 
transportation  facilities  far  surpassing  in  convenience, 
and  equal  in  excellence  to,  those  of  any  State  in  the 
Union.  Eighty-five  per  cent  of  all  the  lands  in  Illinois 
are  within  five  miles  of  railways  in  actual  operation  ;  11:^^ 
per  cent  between  five  and  ten  miles  ;  2^  per  cent  be- 
tween ten  and  fifteen  miles,  and  one  per  cent  between 
fifteen  and  twenty  miles.  The  many  railways  of  other 
States  close  to  the  boundary  line  are  not  included  in 
this  estimate. 

In  the  building  of  the  roads,  no  considerable  natural 
obstacles  and  difficulties  of  construction  were  presented 
by  the  material  encountered  or  by  the  contour  of  the 
surface  of  the  State.  On  the  contrary,  the  topography  of 
the  country  is  especially  adapted  to  the  construction  and 
operation  of  railways  ;  unlike  California,  there  are  no  lofty 


19 

nor  vast  barren  mountains  of  rock,  no  mountain  grades 
to  encounter,  no  tunnels,  no  snowsheds,  no  expensive 
ferries,  no  arid  regions,  no  mountain  fastnesses,  no  deserts. 
Unlike  California  in  another  comprehensive  and  impor- 
tant respect,  Illinois  joins  and  is  almost  completely  sur- 
rounded by  States,  each  closely  analogous  to  it  in  physical 
characteristics  and  industrial  conditions.  From  these 
States  an  enormous  volume  of  passenger  and  freight 
business  is  constantly  poured  upon  its  railroads. 

Volume  of  Business. 

It  is  a  well-known  fact  that  the  most  indispensable  ele- 
ment by  which  to  justify  and  properly  secure  any  con- 
siderable permanent  reduction  in  rates  for  the  carriage 
of  freight  and  passengers  is  a  sufficient  volume  of  busi- 
ness moving  equally  divided,  in  tonnage  and  numbers, 
in  opposite  directions  over  the  roads.  If  in  this  respect 
there  are  marked  inequalities  between  railways,  it  is  not 
probable  that  a  combination  of  all  other  favorable  fac- 
tors would  establish  those  having  the  least  volume  on  an 
equality  with  those  having  the  greatest  and  the  most 
evenly  balanced  traffic  ;  at  least,  not  so  nearly  that  the 
same  rates  would  be  reasonable  and  equitable  for  the 
extremes  and  all  intermediates. 

This  statement  being  susceptible  of  demonstration  and 
indeed  manifestly  true,  the  conclusion  is  irresistible  that 
as  a  rule  it  would  be  unjust,  inequitable  and  harmful  to 
establish  equal  rates  thronghout  a  State  or  the  country 
at  large,  for  the  reason  that  the  volume  of  traffic,  and 
most  of  the  other  tangible  elements,  are  nearly  every- 
where unequal  and  unlike.  There  seems  to  be  no  con- 
ceivable justification  for  uniform  rates  of  transportation 
on  railways  unless  their  ownership  M'ore  vested  in  the 
general  Government    and    the  Congress  of  the   United 


20 

States,  as  a  public  policy,  should  establish  uniform  class- 
ification and  rates  for  the  country  at  large. 

Comparisons  of  the  mere  figures  of  rates  to  determine 
their  relative  reasonableness  are  misleading  and  harm- 
ful. For  example:  At  an  early  day,  pork  and  wheat 
were  hauled  by  teams  150  miles  to  Chicago  for  half  a 
cent  a  pound.  At  a  later  day,  for  similar  freight,  eight 
cents,  and,  in  an  exigency,  as  high  as  fifteen  cents  a 
pound,  was  paid  to  team  freighters  for  a  like  distance 
from  Sacramento  across  the  Sierra  Nevada  mountains  to 
Virginia  City.  It  is  clear  that  a  comparison  of  the  fig- 
ures of  these  rates  gives  practically  no  light  by  which  to 
see  their  relative  reasonableness.  Even  from  what  has 
already  been  said,  it  will  be  conceded  by  persons  familiar 
with  the  subject  that  railroad  rates  which  would  be  equi- 
table and  reasonable  in  Illinois  at  this  time  would  be 
unreasonably  low  and  inequitable  in  California,  but 
other  very  important  factors  will  be  presented  to  further 
demonstrate  the  truth  of  this  statement,  applied  not 
only  to  Illinois,  but  to  other  States  lying  in  the  Missis- 
sippi valley,  the  conditions  of  which  governing  the 
question  of  transportation  rates  have  been,  and  are  now, 
fairly  analogous;  but  they  are  also  all  in  a  remarkable 
degree  at  variance  with  the  conditions  existing  in  Cali- 
fornia. 

California   Rates. 

The  rates  established  in  California  for  the  transporta- 
tion of  persons  and  property  by  rail  are  as  a  whole 
higher  than  those  now  prevailing  in  some  of  these 
States,  but  they  are  lower  than  tlie  rates  charged  in  some 
States,  and  in  the  States  alluded  to  at  the  time,  about 
twenty  years  ago,  when  some  of  the  most  important 
conditions  properly  affecting  the  establishment  of  rates 


21 

were  substantially  the  same  as  those  which  influence  the 
present  rates  in  Calfornia. 

Many  comparisons  of  rates  will  be  found  in  the  appen- 
dix of  this  report,  but  those  figures  can  be  received  only 
as  prima  facie  evidence  that  the  rates  they  represent  are 
reasonable,  unreasonably  high  or  unreasonably  low,  just 
as  the  interest  or  prejudice  of  persons  making  use  of 
them  may  direct;  the  figures  themselves  present  only 
the  fact  of  the  difference. 

The  question  of  the  comparative  reasonableness  of 
the  rates,  involving,  as  that  element  does,  the  public  in- 
terest as  well  as  the  interests  of  the  railroad  companies, 
receives  no  answer  from  any  possible  consideration  of 
the  figures  alone. 

All  of  the  essential  conditions  and  elements  feasible 
to  obtain  must  be  employed,  to  arrive  at  a  satisfactory 
approximation  of  what  are  reasonable  rates;  and  no  fair- 
minded,  disinterested  person,  fairly  well  qualified  in 
such  matters,  after  a  careful  examination  of  the  rail- 
roads of  California,  and  consideration  of  the  physical 
conditions  and  other  elements  properly  affecting  rates, 
would  declare  that  the  passenger  and  freight  rates  on  all 
of  the  roads  ought  to  be  the  same  for  like  distances  and 
service.  In  many  instances  the  fortunes  of  wealthy  and 
enterprising  citizens  underlie  railways  in  which  they  in- 
vested their  money  and  vitality,  lost  because  inexperi- 
ence led  them  to  establish  rates  for  their  roads  by  the 
rates  of  companies  having  quite  different  and  more 
favorable  circumstances  and  conditions. 

Such  instances  can  be  found  in  California,  and  others 
may  yet  occur  from  the  same  and  a  variety  of  quite  pos- 
sible causes.  In  the  adoption  of  schedules  of  rates  for 
California,  the  Commissioners  are  confronted  by  condi- 
tions which    prohibit  them   from   predicating  low  rates 


22 

upon  the  anticipation  that  very  rapid  development  of  the 
agricultural  and  other  industries  of  the  State  will  occur 
to  increase  the  volume  of  business,  such  as  referred  to 
in  Illinois  and  its  adjacent  States,  also  in  Eastern  Kan- 
sas, Nebraska  and  in  the  Dakotas.  Although  such  a 
policy  was  adopted  with  good  results  by  some  of  the 
railroad  companies  in  the  States  alluded  to,  the  condi- 
tions existing  in  California  and  in  its  adjacent  States  are 
greatly  different,  and  present  no  foundation  on  which  to 
base  such  a  policy. 

The  Development  of  Agricultural   and    Other   In- 
dustries IN  California. 

The  statement  that  your  Board  is  prohibited  from 
basing  low  rates  upon  anticipated  rapid  development  of 
agricultural  and  other  industries  is  sustained  by  the 
general  situation  in  California,  which  must  be  taken 
into  account  in  every  effort  to  determine  the  question  of 
just  and  equitable  rates  for  its  railways. 

It  is  believed  that  the  following  description  is  truthful, 
therefore  important  and  essential  to  accurate  conclusions 
as  affecting  the  railway  problem  of  California. 

Of  the  100,000,000  acres  of  land  in  the  State,  25,000,- 
000  are  claimed  to  be  productive  valley  lands.  15,000,- 
000  acres  are  arable  lands  in  the  foothills  of  the  moun- 
tains. Of  the  remaining  60,000,000  acres  38,000,000 
are  classed  as  mountainous  and  22,000,000  as  desert 
lands. 

A  remarkable  proportion  of  the  various  products  of 
the  earth  can  be  successfully  raised  somewhere  in  the 
State,  but  the  tentative  labors  of  the  people,  past  and 
present,  in  the  work  of  adapting  those  products  to  all 
the  varying  conditions  of  the  climate  and  arable  lands 


23 

are  far  from  complete,  indeed,  those  arduous  labors  are 
but  fairly  commenced. 

The  uncertainty  existing  in  this  respect,  and  the 
progress  made  in  adaption,  are  indicated  in  a  measurable 
degree  by  Appendix  "F. "  This  tabulated  statement 
shows  that  the  valley  counties,  many  of  which  have  been 
distinguished  for  their  immense  production  of  wheat, 
have  largely  receded  from  growing  that  principal  staple, 
and  substituted  the  growth  of  other  products,  and  again 
other  counties  have  in  a  corresponding  degree  taken  up 
the  cultivation  of  wheat.  In  the  aggregates  of  the  table 
it  is  gratifying  to  find  that  great  increase  is  shown  in  the 
population,  value  of  real  estate,  and  the  area  of  wheat, 
fruit,  and  other  farm  products  enumerated,  there  being  a 
decrease  only  in  sheep. 

It  needs  no  argument  to  demonstrate  that  the  60,000,- 
000  acres  of  mountainous  and  desert  lands  will  remain 
substantially  as  they  now  are  for  a  considerable  period  of 
time,  and  will  contribute  comparatively  little  that  is  tan- 
gible to  the  rapid  development  and  wealth  of  the  State, 
excepting  the  precious  and  some  other  valuable  minerals, 
which  in  California  mainly  bring  wealth  but  not  large 
and  permanent  population,  or  volume  of  passenger  and 
freight  traffic. 

Large  Land-holdings. 

The  development  of  most  of  the  valle^'^s  and  much  other 
highly  productive  land  of  the  State  is  more  retarded  by 
being  held  in  large  estates  and  at  unduly  high  valuations 
than  by  the  time  necessary  to  suitably  adapt  products  to 
the  soil,  or  by  any  other  cause. 

In  the  aggregate  nearly  half  of  the  arable  land  of 
California  is  owned  in  large  areas,  averaging  about 
15,000  acres,  and    they  embrace   more  than  half  of  the 


24 

choicest  land.  Also,  unfortunately  for  the  development 
of  the  State,  it  is  matter  of  common  knowledge  that 
they  are  held  at  high,  if  not  for  a  time  at  least,  practi- 
cally prohibitory  valuations. 

Even  under  the  equitable  rights  of  inheritance  in  this 
country,  a  considerable  period  of  time  will  be  required 
for  the  subdivision  of  these  large  tracts  so  that  small, 
thoroughly  improved  and  productive  farms  will  be  sub- 
stituted for  them  throughout  the  cultivable  area  of  the 
State.  This  subject  is  one  of  such  great  importance,  in 
respect  to  railway  and  all  other  interests,  I  have  collected 
and  adapted  from  various  sources  of  information,  and 
collated  interesting  details  of  this  subject,  which  will  be 
found  in  Appendix  "  G." 

The  Foothills. 

The  comparatively  slow  development  of  the  foothills  of 
the  mountains,  which  embrace  such  a  large  proportion 
of  the  arable  lands  of  the  State,  is  apparent  from  their 
rugged  character,  and  in  what  is  known  of  the  means 
employed  and  the  time,  money  and  vitality  already  ex- 
pended in  the  foothill  counties,  which  have  been  parti- 
ally subdued  and  made  very  highly  productive,  as  many 
of  them  are  capable  of  being. 

Irrigation. 

Another  reason  why  the  development  of  the  agricul- 
tural resources  of  California  will  not  be  very  rapid  is 
found  in  the  question  of  irrigation. 

Large  areas  of  the  arable  portions  of  the  State  can  only 
be  brought  under  successful  cultivation  by  the  construc- 
tion of  systems  for  irrigating  them,  similar  to  those 
already  constructed  at  some  localities  in  the  central  and 
southern  parts  of  the  State.     That  this  will  require  con- 


25 

siderable  time   is  apparent,  and,  also,  the  experience  in 
this  and  adjoining  States  confirms  it. 

Physical  Characteristics  of  the  States  and  Terri- 
tories Surrounding  California. 

The  greatest  and  most  productive  State  that  adjoins 
California  is  Oregon,  on  the  north,  but,  excepting  a  con- 
siderable interstate  passenger  traffic,  the  commercial  in- 
tercourse by  railroad  is  small. 

The  Siskiyou  mountains  divide  the  States,  and  the 
products  on  each  side  of  the  range,  as  a  rule,  seek  tide- 
water and  ocean  transit,  respectively,  at  San  Francisco 
and  Portland.  Adjoining  on  the  east  is  the  State  of 
Nevada  and  the  Territory  of  Arizona,  included  on  the 
westerly  side  of  a  broad,  elevated  and  broken  arid  region, 
extending  north  and  south  of  California,  which  is  from 
1,200  to  1,500  miles  wide.  This  vast  area  has  compara- 
tively a  very  limited  pastoral  capacity,  and  its  agricul- 
tural capacity  is  very  much  less.  Mining  is  the  chief 
industry.  On  the  south  of  the  State  is  the  most  unpro- 
ductive part  of  the  Republic  of  Mexico,  with  which  there 
is  but  little  commercial  intercourse  by  rail  or  otherwise. 

California  an  Exceptional  State. 
Sufficient  has  already  been  said  to  demonstrate  that 
California  is  so  exceptional  in  its  conditions  that  it  can- 
not be  properly  included  in  a  general  consideration  of 
the  rates  of  the  railroads  of  the  country  at  large,  and 
thus  determine  what  would  be  just  and  equitable  rates 
for  the  transportation  of  persoiis  and  property  within  its 
limits. 

The  Construction  and  Maintenance  of  Railways 

and  Their  Equipment. 
The  character  of  the  construction  of  the  railroads  of 
California  and  of  their  movable   and  stationary  equip- 


26 

ment,  and  also  their  present  material  and  physical  con- 
dition, compare  favorably  with  the  construction,  equip- 
ment and  condition  of  the  other  railways  of  the  United 
States.  The  physical  evolution  of  these  roads  in  all  de- 
tails has  generally  kept  pace  with  the  development  of 
the  railways  of  the  world. 

With  unimportant  exceptions,  at  no  time  in  their  his- 
tory have  the  railroads  of  California  been  equal  in  their 
material  conditions  to  those  now  existing.  There  is 
more  and  superior  motive  power  and  car  equipment,  a 
higher  standard  of  track  maintenance  and  better  facili- 
ties of  all  kinds. 

Character  of  Accommodation  and  Service. 

The  passenger  and  freight  service  is  as  prompt,  effi- 
cient, comfortable  and  good  as  can  be  found  anywhere 
under  like  circumstances. 

Rates  Transposed. 

Referring  again  to  Illinois,  attention  is  called  to  Ap- 
pendix "H,"  which  presents  class  rates  in  effect  on  the 
lines  of  the  Southern  Pacific  Company  in  California, 
transposed  for  the  Western  Classification,  compared  with 
the  rates  in  effect  in  Illinois  for  similar  distances  from 
Chicago,  which  on  the  following  lines  are  also  influenced 
by  competition  : 

The  Chicago,  Burlington  &  Quincy,  Rock  Island  & 
Pacific,  Chicago,  Milwaukee  &  St.  Paul,  and  the  Chi- 
cago &  Northwestern  railways.  The  rates  of  these  roads 
are  established  under  the  authority  of  the  Board  of  Rail- 
way and  Warehouse  Commissioners  of  Illinois,  and  the 
maximum  rates  authorized  are  also  shown.  On  the 
whole  this  comparison  of  figures  is  favorable  to  the 
Southern    Pacific   Company's   rates,  and  if  the  general 


27 

physical  characteristics  of  Illinois  and  its  neighbor 
States  are  taken  into  account,  the  comparison  becomes 
still  more  favorable,  but  not  so  complete  and  satisfactory 
as  it  ought  to  be  to  justify  a  determination  as  to  which 
rates  are  the  most  reasonable  and  equitable.  A  compar- 
ison of  the  figures,  even  with  the  aid  of  the  difference  in 
physical  characteristics  which  have  been  presented, 
leaves  the  question  of  the  relative  justice  and  equity  of 
the  rates  largely  to  vague  conjecture,  also  to  prejudice 
and  personal  interest  in  all  their  phases. 

Before  an}'  fairly  accurate  conclusion  can  be  reached, 
further  and  more  precise  investigations  must  be  made 
in  detail,  of  the  conditions  spoken  of  generally,  and  also 
of  all  other  factors  affecting  the  operation  of  the  roads, 
else  any  judgment  will  rest  on  a  very  imperfect  basis. 

Some  of  the  factors  necessary  to  fairly  accurate  con- 
clusions are,  the  cost  of  fuel;  of  materials  and  labor;  the 
volume  and  character  of  the  freight  traffic  and  the  bal- 
ance of  tonnage;  the  proportion  of  passenger  and  freight 
business,  the  permanency  of  business,  its  prospective 
increase  or  decline;  the  uniformity  of  the  trafiic  at  all 
seasons;  the  length  of  the  roads  and  the  sources  of  the 
traffic  on  them;  the  average  haul;  the  existing  and 
probable  competitions,  etc. 

In  1870  the  total  freight  moved  by  the  Pennsylvania 
Railroad  was  5,427,400  tons  (2,000  pounds),  of  which 
3,582,905  (66  per  cent)  were  made  up  of  coal,  iron,  stone 
and  iron  ores  ;  and  1,844,495  tons  (34  per  cent)  were  of 
agricultural  products,  merchandise,  livestock  and  other 
articles.  The  average  rate  per  ton  per  mile  for  all 
classes  of  freight,  including  coal  and  for  through  and 
local  freight,  was  1  549-1,000  cents. 

In  1891  the  total  freight  moved  by  the  Pacific  System 
of  the  S.  P.  Company  was  5,688,056  tons  (2,000  pounds), 


28 


of  which  717,000  tons  (13  per  cent)  were  of  stone,  iron, 
sand,  salt,  coal  and  products  of  the  mines,  and  4,971,056 
tons  (87  per  cent)  were  of  agricultural  products,  products 
of  the  forest,   animals,   manufactures  and  merchandise. 

The  average  rate  per  ton  per  mile  for  all  classes, 
through  and  local,  was  1  650-1,000  cents. 

There  being  no  division  of  the  traffic  accounts 
enabling  a  precise  statement  of  the  tonnage  within  the 
limits  of  California,  the  tonnage  of  the  Pacific  System 
is  used  in  the  foregoing  comparison  ;  but,  taking  into 
account  the  ferry  and  suburban  business,  the  following 
estimate  is  believed  to  be  a  close  approximation  and 
accurate  enough  for  the  purposes  of  this  report : 


Passengers  Carried  One  Mile,    Year  1891. 


Pacific  System. 

AVithin  the  State  of  California 

381,275,038,  or  73  % 
142,407,297,  or  27  % 

I'll  adjoininET  States  and  Territories 

Total .             

523,682,335,  or  100  % 

Freight  Moved  One  Mile,   Year  1891  (tons). 


Pacific  System. 

832,949,855,  or  61  /o 
632,541,712,  or  39  % 

In  adjoining  States  and  Territories 

Total 

1,365,491,567,  or  100  % 

On  the   Pennsylvania  Railroad  at  the  same  date  the 
average   rate   for  through  and    local    passengers    was   3 


29 

cents  a  mile.  Oii  the  Pacific  System  of  the  S.  P.  Coiu- 
pariy  the  present  rate  for  through  and  local  passengers 
averages  2  16-100  cents  per  mile.  The  local  rates  aver- 
age 2  73-100  cents  per  mile.  The  ferry-suburban  rates 
average  93-100  of  one  cent  per  mile,  and  they  represent 
66  per  cent  of  all  passengers  carried  by  this  company 
in  California.  This  suburban  and  ferry  rate,  not  in- 
cluding the  free  transportation,  is  lower  than  the  average 
of  suburban  rates  in  the  Union,  and  about  40  per  cent 
lower  than  the  cost  per  mile  to  passengers  on  the  New 
York  elevated  railways,  where  the  volume  of  traffic  is 
much  more  than  ten  times  greater. 

Note  :  In  the  populous  and  business  part  of  the  city 
of  Oakland  the  people  have  the  privilege  of  transporta- 
tion to  and  fro,  free  of  charge,  for  a  distance  of  about 
four  miles,  and  several  millions  of  trips  are  made  an- 
nually on  the  trains. 

Comparing  the  rates  charged  by  the  California  South- 
ern (Santa  Fe)  in  1891  with  those  charged  by  roads  in 
Pennsylvania,  which  had  in  1870  a  much  greater  vol- 
ume of  passenger  and  freight  traffic,  the  following  result 
is  obtained : 

On  the  Pennsylvania  roads  the  average  rate  per  ton 
per  mile  was  more  than  3  cents  ;  the  average  rate  per 
mile  for  passengers  was  3  5-10  cents. 

On  the  California  Southern  the  average  rate  per  ton 
per  mile  was  2  617-1,000  cents  ;  the  average  rate  per 
mile  for  passengers  was  2  831-1,000  cents. 

Continuing  the  comparison  with  the  Pennsylvania 
Railroad,  the  Atlantic  &  Pacific  (Santa  Fe)  from  Mojave 
to  the  Needles,  241  miles,  presents  a  still  greater  con- 
trast. Pennsylvania  Railroad  average  rate  per  ton  per 
mile,  1  549-1,000  cents  ;  Atlantic  &  Pacific  average  rate 
per  ton  per  mile,  1  170-1,000  cents  ;  Pennsylvania  Rail- 


30 

road  average  passenger  rate  per  mile,  3  cents  ;  Atlantic 
&  Pacific  average  passenger  rate  per  mile,  1  81-100 
cents. 

The  low  average  rates  of  the  Atlantic  &  Pacific  are 
undoubtedly  due  mainly  to  the  fact  that  it  has  little  local 
passenger  or  freight  traffic,  its  tonnage  and  passengers 
being  almost  entirely  "overland"  and  subject  to  power- 
ful competitions.  The  effect  of  these  low  rates  upon  the 
operations  of  the  road  appears  in  the  following  facts  : 

The  operating  expenses  of  the  road  for  the  year  ending 
June  30th,  1891,  including  rental  of  track  and  rolling 
stock,  but  exclusive  of  taxes,  interest  and  sinking  fund 
requirements,  exceeded  the  gross  earnings  $37,000.  The 
general  deficit  for  the  year,  including  all  requirements, 
Avas  more  than  $2,000,000.  No  year  since  the  opening 
of  the  road  has  failed  to  show  a  large  deficit,  the  aggre- 
gate now  being  many  millions.  It  is  quite  clear  that  as 
an  auxiliary  line  only  could  the  road  be  sustained.  It  is 
also  true  that  the  Santa  Fe  company  has  been  obliged 
by  repeated  physical  disaster  in  the  Temecula  cafion, 
and  very  low  earnings  on  that  line,  to  abandon,  tempo- 
rarily at  least,  that  direct  route  to  San  Diego. 

Comparisons  with  other  roads  in  Pennsylvania,  hav- 
ing about  equal  length  of  road  and  traffic,  and  corre- 
sponding in  tonnage  and  passengers  with  the  San  Fran- 
cisco &  North  Pacific,  the  North  Pacific  Coast,  Carson  & 
Colorado,  Pacific  Coast  and  other  roads  in  California  are 
also  favorable  to  the  latter. 

In  1870  the  following  rates  were  in  force  in  other 
States  : 

In  Massachusetts  the  average  passenger  rate  per  mile 
was  2  61-100  cents  ;  the  average  freight  rate  per  ton  per 
mile  was  5  62-100  cents  local,  and  2  90-100  cents  for  con- 
necting interstate  rates. 


31 


In  Illinois  the  average  rate  per  ton  per  mile  charged 
for  all  classes  of  freight,  through  and  local,  by  the  prin- 
cipal roads,  was,  in  1870,  2  43-100  cents  ;  and  the  passen- 
ger rates  were  from  3  to  6  cents  per  mile,  a  fair  average 
being  about  4  cents. 

Substantially  the  same  rates  as  those  cited  for  Illinois 
prevailed  at  that  date  in  many  other  States  having  much 
greater  volume  of  business  and  more  favorable  physical 
conditions  and  other  factors  by  which  rates  should  be  de- 
termined than  the  railroads  of  California  have  to-day. 

It  is  not  deemed  necessary  to  give,  in  extenso,  consid- 
eration to  these  comparisons  in  addition  to  the  general 
remarks  which  have  already  been  made.  Attention  is, 
however,  called  to  the  density  of  population  in  those 
States  at  that  date,  1870,  and  in  1890,  compared  with 
California,  and  also  showing  the  increase  in  twenty 
years  : 

Population  Per  Square  Mile. 


State. 

1870. 

1890. 

Increase    Per 
Square  Mile 
IN  20  Years. 

Massachusetts 

New  York 

Pennsylvania 

Ohio 

Indiana    

181 
94 
80 

65 
46 

45 
20 

25 

4  5-10 
3 

276 
122 
J 16 

89 

60 

67 

35 

38 

17  4-10 
7  63-100 

95 
28 

36 
24 
14 
22 

15 
12 

12  9-10 
4  63-100 

Illinois 

Michigan 

Missouri 

Kansas 

California 

The  States  surrounding  and  adjoining  Illinois  now 
have  an  average  population  of  41  per  square  mile.  The 
States  surrounding  and  adjoining  California  have  an 
average  population  of  1  4-10  per  square  mile,  and  that 
is  largely  made  up  by  including  Oregon,  whose  commer- 
cial mart  is  Portland. 


The  increase  per  square  mile  in  the  population  of  these 
several  States  during  the  past  twenty  years  is  worthy  of 
consideration,  and  is  an  important  factor  in  determining 
what  would  be  just  and  equitable  charges  for  the  trans- 
portation of  persons  and  property  in  California. 
.  The  railroads  of  California  extend  throughout  its  great 
and  sparsely  occupied  territory.  The  Carson  &  Colorado 
Railroad,  having  108  miles  in  this  State  east  of  the  Sierra 
Nevada  mountains,  is  obliged  to  seek  market  for  the  pro- 
ducts of  its  territory  by  the  construction  of  a  circuitous 
road  along  the  mountainous  border  of  the  State  of  Nevada 
for  185  miles,  and  thence  via  the  Virginia  &  Truckee  and 
the  Central  Pacific  roads  285  miles  additional  to  San 
Francisco. 

The  situation  of  the  Nevada,  California  &  Oregon 
Railroad  is  practically  the  same,  the  traffic  of  each  pass- 
ing over  arid,  unproductive  areas  and  lofty  ranges  of 
mountains. 

Grain  Rates. 

The  cereals  being  at  present  the  chief  of  the  staple 
products  of  California,  the  cost  of  marketing  the 
surplus,  the  total  bulk  and  weight  of  which  is  greater 
than  any  other  article  transported,  is  of  great  impor- 
tance. 

A  comprehensive  comparison  of  the  rates  by  rail  to 
ocean  transit  at  San  Francisco,  Port  Costa  and  other  bay 
points,  also  to  San  Pedro,  Port  Harford,  and  other  coast 
ports  from  several  hundred  points  in  the  State,  with 
those  existing  in  Kansas  and  other  States,  the  staple 
product  of  which  is  cereals,  shows  that  the  cost  to  the 
farmers  of  California  is  but  a  small  fraction  over  1| 
cents  per  bushel  greater  than  to  the  farmers  of  those 
States. 


33 

This  comparison  is  made  by  estimating  the  average 
weight  of  the  California  grains  at  55  lbs.  per  bushel,  and 
upon  an  average  haul  of  150  miles. 

To  determine  the  relative  reasonableness  of  the  rates 
in  Kansas  and  California,  all  of  the  factors  spoken  of 
elsewhere  in  tliis  report,  and  many  others,  must  be 
taken  into  account.  Two  significant  facts,  however,  may 
be  mentioned. 

First. — The  fact  that  nearly  all  of  the  railroad  com- 
panies in  Kansas  are  bankrupt,  the  deficits  from  1888  to 
1891,  after  payment  of  operating  expenses  (but  probably 
not  complete  maintenance),  the  taxes  and  interest,  being 
many  millions  of  dollars. 

Second. — The  fact  that  in  1891  the  construction  of 
railroads  in  Kansas  came  to  an  absolute  stop. 

Cost  of  Fuel. 

The  cost  of  the  fuel  consumed  in  the  operation  and 
maintenance  of  the  railroads  of  California  is  unusually 
great ;  and  there  is  no  probability  of  materially  reducing 
it.  Therefore,  being  so  important  and  permanent  an 
item  of  expense,  and  one  that  can  be  readily  estimated 
with  fair  degree  of  exactness,  it  is  briefly  presented  in 
connection  with  the  more  comprehensive  comparisons 
with  railway  operations  in  other  States,  which  are  made 
in  this  report. 

In  California  the  principal  fuel  used  is  coal,  a  small 
proportion  only  being  wood.  With  minor  exceptions 
the  results  show  that  the  average  cost  of  wood  is  fully 
equivalent  to  the  cost  of  coal,  being  from  $2.75  to  $6.00 
a  cord,  delivered  on  the  locomotive  tenders. 

The  actual  average  cost  of  the  coal  used  by  the  South- 
ern Pacific  Company  on  its  lines  in  California  is  $6.40 
per  ton,  delivered  on  the  locomotive  tenders.     The  aver- 


34 

age  cost  to  the  San  Francisco  &  North  Pacific  Railroad 
Company  is  $7.25  per  ton.  The  average  cost  to  the  rail- 
roads in  Southern  California  is  $7.80  per  ton,  the  cost 
to  some  roads  being  as  high  as  $9.00. 

The  average  cost  of  the  coal  used  by  all  of  the  railroad 
companies  of  California  is  at  least  $7.00  per  ton,  deliv- 
ered on  the  locomotive  tenders  and  at  the  other  places  of 
consumption. 

From  Philadelphia  and  Baltimore  to  Chicago  and  St. 
Louis  and  thence  to  Kansas  City  the  average  cost  of  coal 
delivered  on  the  locomotive  tenders  of  the  roads  extend- 
ing throughout  Pennsylvania,  Maryland,  West  Virginia, 
Ohio,  Indiana,  Illinois  and  Missouri  may  be  safely  esti- 
mated at  not  more  than  $1.26  per  ton, — 18  per  cent  only 
of  the  average  cost  per  ton  to  the  roads  operated  in  Cali- 
fornia. 

The  following  comparisons  show  the  vital  importance 
of  cheap  fuel  in  the  operation  of  railroads.  The  cost  of 
the  fuel  used  by  the  Southern  Pacific  Company  in  oper- 
ating its  roads  in  California  was,  in  1891,  $3,238,880, 
equal  to  $1,156.00  per  mile  of  road. 

The  system  of  the  Chicago  &  Alton  Railroad  Com- 
pany from  Chicago  to  St.  Louis  and  to  Kansas  City,  in 
all  848  miles  (not  including  second  track),  extends  through 
Illinois  and  Missouri.  The  cost  of  the  coal  for  operating 
it,  delivered  on  the  tenders  of  the  locomotives,  was  in  1887 
$416.00  per  mile,  being  $740.00  per  mile  less  than  the 
cost  to  the  Southern  Pacific  Company  in  California  in 
1891.  But  there  is  to  be  considered  the  further  fact  that 
the  passenger  and  freight  mileage  per  mile  of  road  was 
much  greater  on  tne  Chicago  &  Alton  System  than  on 
the  Southern  Pacific  Company's  lines. 

Estimating  the  passenger  and  freight  mileage  of  the 
Chicago   &    Alton    System  to    be    the    same    as    on    the 


35 

Southern  Pacific  lines  of  California,  shows  that  the  dif- 
ference in  the  cost  of  coal  per  mile  of  road  operated  is 
fully  $315.00  per  annum,  and  that  this  excess  in  cost 
aggregates  $2,800,000  per  annum,  or  a  fraction  more  than 
10  per  cent  of  the  gross  earnings  of  the  roads  of  the 
Southern  Pacific  Company  in  California. 

The  average  cost  of  the  coal  used  by  the  Santa  Fe  Sys- 
tem in  California  is  $7.75  per  ton  ;  therefore,  as  its  volume 
of  passenger  and  freight  business  and  mileage  per  mile 
of  road  are  much  less  than  on  the  roads  of  the  Southern 
Pacific  Company,  it  is  safe  to  estimate  that,  compared 
with  the  Alton  System,  the  excess  in  the  cost  of  this  item 
of  expense  is  considerably  more  than  10  per  cent  of  its 
gross  earnings.  This  excess  in  cost  of  fuel  is  an  onerous 
charge  in  the  cost  of  operating  the  railroads  of  California, 
and  it  amounts  to  from  10  per  cent  to  20  per  cent  of  their 
gross  earnings. 

The  fact  that  the  average  cost  of  coal  in  California  is 
more  than  five  times  as  great  as  the  average  cost  on  the 
lines  spoken  of,  from  the  Atlantic  seaboard  to  Kansas 
City,  also  the  gradients  being  much  more  difficult  and 
the  volume  of  passenger  and  freight  traffic  considerably 
less,  throw  sufficient  light  upon  the  question  to  clearly 
show  that  comparisons  of  the  figures  of  rates  alone  to 
determine  their  relative  justice  and  equity  will  not  be 
accepted  or  upheld  even  by  those  persons  least  informed. 

There  is  not  a  driver  of  a  transportation  team  toiling 
over  the  vast  mountains,  or  through  the  desert  arid 
regions  of  the  West,  carefully  training  a  "  green  line 
mule,"  who  does  not  at  the  same  time  consider  and 
learn  to  know  that  the  cost  of  l1\^l7the  character  of  the 
roads  and  the  tonnage  to  and  fro,  and  also  his  own 
compensation,  are  important  factors  by  which  the  rates 
of  his  line  are  made  and  justified. 


Low  Tkanscontinental  Rates  for  Certain  Products 
TO  Eastern  Markets. 

It  is  well  to  consider  the  fact  that  the  railway  com- 
panies have  an  especial  interest  in  common  with  the 
people  of  California  in  low  rates  for  the  transportation 
of  the  various  products  of  the  State,  for  which  it  is  fea- 
sible to  find  a  market  by  rail  east  of  the  Rocky  moun- 
tains. 

The  managers  of  the  railroads  appreciate  this  fact, 
and  they  evidently  act  upon  it  by  making  rates  so  low 
for  the  class  of  service  performed  that  they  themselves 
are  not  sure  of  direct  and  reasonable  remuneration,  or 
even  reimbursement  of  the  actual  cost  to  them.  But 
whatever  tends  to  increase  the  producing  capacity  of  the 
State  is  not  only  beneficial  to  the  people,  but  also  to  the 
railroad  properties,  and  it  is  doubtless  for  this  reason, 
and  because  they  estimate  indirect  and  ultimate  com- 
pensation, that  the  rates  are  so  much  reduced  on  this 
class  of  business. 

The  rates  which  have  prevailed  this  season  on  some  of 
the  important  products  shipped  to  Eastern  markets  by 
the  Southern  Pacific  Company  are  presented  in  the  fol- 
lowing schedule: 


37 


Rate  Per  Ton  Per  Mile,  San  Francisco  to    Eastern  Points^ 
on  Commodities. — Summer  of  1892. 


6 

2o,ooo  Lbs.  per  Carload. 

fl  is 

fl  ^ 

a  2 

a  2 

a 

'S 

o  g^ 

Oft 

So 

o  a 

o 

<s 

<D.2 

v> 

^ 

IS 

3» 

S  «8 

a  . 

Point. 

a 

g"^ 

<c  a 

<u  a 

CO 

«=--§ 

o.« 

Cca  g 

a«p 

O-oJ 

a 

0  2 

So 

n 

H.-S2 

a«2 

li 

QJ-O 

a 

*S 

^-^s 

"■^?, 

■ 

S 

2g« 

05^  a! 

CENTS. 

CENTS. 

CENTS. 

CENTS. 

CENTS. 

Mo.  River 

1915 

1.15 

1.05 

1.56 

1.46 

1.15 

St.  Louis 

2329 

.94 

.86 

1.29 

1.20 

.94 

Chicago 

2407 
2286 
2184 
2449 

.91 

.96 

1.01 

.90 

.83 
.88 
.91 
.81 

1.25 
1.31 
1.38 
1.22 

1.17 
1.22 
1.28 
1.14 

.91 

St    Paul 

.96 

Galveston 

1.01 

New  Orleans 

.90 

Louisville 

2602 
2670 

2875 

.84 
.82 
.77 

.77 
.76 
.69 

1.15 
1.12 
1.04 

1.07 

1.05 

.98 

.84 

.82 

Pittsburg 

.77 

Cleveland 

2764 
3209 
3228 

.79 
.69 
.68 

.72 
.62 
.62 

1.09 
.93 
.93 

1.01 
.87 

.87 

.79 

.69 

Philadelphia 

.68 

New  York 

3319 
3446 
2134 

.66 

.64 

1.03 

.60 
.58 
.94 

.90 

.87 

1.40 

.84 

.81 

1.31 

.66 

Boston 

.64 

Houston.  .  ..y. 

1.03 

Value  per  100  pounds,  wholesale  prices  in  San  Fran- 
cisco market:  Canned  Goods,  $4.55;  Raisins,  $5.87; 
Dried  Fruit,  $5.00;  White  Beans,  $2.06;  Lima  Beans, 
$2.80. 


299025 


38 


Rate  Per  Ton  Per  Mile,  San  Fravicisco  to  Eastern  Points, 
on  Commodities. — Summer  of  1892. 


a 
a 
02 

1. 

d 

0  O 

p  a 

01  03 

Pi 

2o,ooo  Lbs.  prr  Carload. 

Point. 

Rate  per  ton  per  mile 
on  Barley  at  $12  per 
ton  to  Missouri  riv- 
er;   $12.50   per  ton 
to  St.  Louis. 

Rate  per  ton  per  mile 
on  liarley  at  $13  per 
ton     to     Chicago ; 
$13.90    per    ton    to 
Cincinnati. 

Rate  per  ton  per  mile 
on  Hops  at  $44  per 
ton. 

Rate  per  ton  per  mile 

on  Nuti  at  $35  per 
ton. 

Missouri  Kiver 

1915 
2329 
2407 
2286 
2184 
2449 
2602 
2670 
2875 
2764 
3209 
3228 
3319 
3446 
2134 

CENTS. 

.62 

CENTS. 

"54 

.... 
.52 

CENTS. 

2.30 
1.89 
1.83 
1.92 
2.01 
1.80 
1.69 
1.65 
1.53 
1.60 
1.37 
1.36 
1.32 
1.28 
2.06 

CENTS. 

1.82 

St.  Louis 

54 

52 
55 
51 

1.50 

Chicago 

1.45 

St.  Paul 

1.53 

Galveston 

New  Orleans 

1.60 
1.43 

Louisville ...                

1.34 

Cincinnati 

1.31 

Pittsburg 

1.22 

Cleveland 

Baltimore 

1.27 
1.09 

Philadelphia 

1.09 

New  York 

1.05 

Boston 

1.02 

Houston 

1.64 

Value  per  100  pounds,  wholesale  prices  in  San  Fran- 
cisco market :  Hops,  $18.00  ;  Nuts,  $10.00. 


39 


Rate  Per  Ton  Per  Mile,  San  Francisco  to  Eastern  Points^ 
on  Commodities. —  Summer  of  1892. 


a 
a 

CO 

a 

o 

*i 

flO 
I2 

Q 

20,000  Lbs.  Per  C 

A  R  LOAD. 

PoI^fT. 

15 
a  bo 

5  a    . 
■f  °5  a 

13  0  a, 

P5 

Rate  per  ton  per  mile 
on  Green  Fruit  at 
S25  per  ton  to  Chi- 
cago; 330  per  ton  to 
New  York. 

Rate  per  ton  per  mile 
on   Potatoes  at  Sli> 

£er  tou  east  to  St. 
ouis ;  319  per  ton 
to  Chicago. 

Missouri  River 

1915 
2329 
2407 
2286 
2184 
2449 
2602 
2670 
2875 
2764 
3209 
3228 
3319 
3446 
2134 

CENTS. 

1.30 

1.07 

1.04 

1.09 

1.14 

1.02 

.96 

.93 

.87 

.90 

.78 

.78 

.75 

.73 

1.17 

CENTS. 

1.30 

1.07 

1.04 

1.09 

1.14 

1.02 

1.15 

1.12 

1.04 

1.09 

.93 

.93 

.90 

.87 

1.17 

CENTS. 

94 

St.  Louis  

77 

Chicago 

79 

St.  Paul 

Galveston 

78 
82 

New  Orleans 

73 

Louisville  

Cincinnati 

Pittsburg 

Cleveland 

Baltimore 

Philadelphia 

New  York 

Boston ....       

Houston 

84 

Value  per  100  pounds,  wholesale  prices  in  San  Fran 
cisco  market :  Green  Fruit,  $3.50;  Sweet  Potatoes,  $1.37^; 
Common  Potatoes,  $  .57. 

To  fairly  consider  the  rates  on  fruit  it  is  necessary  to 
know  and  appreciate  at  least  some  of  the  conditions  of 
its  transportation. 

The  minimum  weight  of  fruit  in  refrigerator  cars  is 
24,000  pounds,  the  rate  on  which  to  Chicago  being  $1.25 
per  100  lbs.  from  San  Jose  or  Sacramento,  the  total  cost 
would  be  $300  per  carload  of  24,000  lbs. 

For  the  service  west  of  Ogden  (proportionately  within 
the  limits  of  this  State)  the  amount  received  by  the 
Southern  Pacific  Company  is  $140.76. 


40 

The  weight  of  refrigerator  cars  averages 40,000  lbs. 

Average  weight  of  ordinary  fruit  car  is 24,000  " 

Excessive  weight  of  refrigerator 16,000  " 

Excessive  weight  of  refrigerator,  return 16,000  " 

Weight  of  ice  east  bound 8,000  " 

Weight  of  fruit 24,000  ' ' 

Total  weight 64,000     ' ' 

Dividing  this  total  weight  (64,000  lbs.)  by  the  revenue 
west  of  Ogden,  $140.76,  gives  22  cents  per  100  lbs.,  or 
$4.40  per  ton  of  2,000  lbs. 

The  distance  from  San  Jose  to  Ogden  being  870  miles, 
the  result  is  that  the  Southern  Pacific  Company  receives 
in  California,  and  throughout  its  eastern  extension  to 
Ogden,  .505  of  a  cent  per  ton  per  mile  for  its  service. 
The  trains  that  bear  this  fruit  to  market  receive  especial 
attention,  and  they  are  moved  over  the  roads  at  high 
velocities,  their  necessary  speed  exceeding  that  of  pas- 
senger trains  in  many  parts  of  the  country. 

Whatever  the  views  of  the  managers  of  the  railways 
may  be,  I  do  not  hesitate  to  express  the  opinion  that 
these  rates,  under  the  existing  conditions,  are  not 
directly  remunerative,  and  that  therefore  the  loss  occa- 
sioned by  them,  properly  ought  to  be  compensated  for  by 
clearly  defined,  direct  or  indirect,  present  or  prospective, 
revenues,  from  other  sources. 

It  will  be  readily  seen,  from  what  has  been  said  and  the 
facts  presented,  that  rates  for  the  transportation  of  per- 
sons and  property,  averaging  from  ten  to  twenty  per  cent 
higher  than  those  in  the  States  east  of  and  adjoining 
Illinois,  are  justified  in  California  by  the  difference  in 
the  cost  of  fuel  alone. 

It  has  also  been  shown  that  the  rates  charged  by  the 
Southern    Pacific,  Atlantic  &  Pacific,  and  the  California 


41 

Southern  Railroad  companies,  for  the  transportation  of 
persons  and  property  in  California,  average  considerably- 
less  than  the  rates  on  Eastern  railroads  at  a  time  when 
the  volume  of  their  business  and  density  of  population 
were  much  greater  than  they  are  in  California  at  this 
date. 

Although  it  is  true  that  their  rates  average  higher  than 
those  of  the  Southern  Pacific,  Atlantic  &  Pacific,  and  the 
California  Southern  companies,  the  same  investigations 
and  comparisons  sustain  the  reasonableness  of  the  rates 
charged  by  the  North  Pacific  Coast,  San  Francisco  & 
North  Pacific,  Carson  &  Colorado,  Nevada,  California  & 
Oregon,  Colusa  &  Lake,  Pacific  Coast,  Eureka  &  Eel 
River,  San  Diego,  Cuyamaca  &  Eastern,  National  City  <fe 
Otay,  Santa  Ana  &  Newport,  Los  Angeles  Terminal, 
Redondo  Railway,  and  also  all  of  the  other  railway 
companies  in  California. 

A  conclusion  that  the  rates  in  California  average  as 
low  as  feasible,  with  due  regard  to  maintenance  and 
improvement  of  the  properties  and  the  character  of 
service,  I  believe  to  be  sustained  by  the  comparisons 
which  have  been  made  within  the  State  of  California 
and  throughout  many  other  States.  But,  if  further 
confirmation  is  needed,  many  untouched  factors,  and 
especially  the  financial  condition  of  the  companies 
operating  the  railroads  in  California,  will,  upon  deeper 
investigation,  provide  the  testimony. 

Conclusions. 

The  examination  of  the  railroads  of  the  State,  and 
investigations  I  have  made,  and  a  careful  consideration 
of  the  data  obtained,  some  of  which  are  presented  in 
condensed  form  in  this  report,  have  led  me  to  the  follow- 
ing conclusions  : 


42 

1st.  That  California  is,  and  always  will  be,  especially 
exceptional  in  its  conditions, — conditions  which  must  be 
factors  in  determining  what  would  be  just  and  equitable 
railroad  rates  for  the  transportation  of  persons  and  prop- 
erty within  its  limits. 

2nd.  That  it  is  wholly  impracticable  to  establish  for  its 
railroads  uniform  passenger  and  freight  charges,  and 
have  them  bear  justly  and  equitably  upon  the  people  of 
the  State  and  the  railroad  companies. 

3rd.  That  the  present  rates  of  the  several  railroads  are 
not  so  nearly  uniform  as  it  may  be  practicable  to  estab- 
lish upon  very  exhaustive  examination  and  careful 
employment  of  the  factors  from  which  they  ought  to  be 
deduced. 

4tli.  That,  taking  into  account  operating  expenses,  and 
all  other  matters  of  general  import  bearing  on  and 
affecting  the  operation  of  railroads  in  this  State,  so  far  as 
I  have  been  able,  I  am  convinced  and  believe  that  the 
rates  charged  by  the  railroad  companies  of  California 
for  the  transportation  of  persons  and  property  are  not  as 
a  whole  unreasonably  high,  and  that,  if  they  are,  then 
the  rates  for  railroad  transportaion  on  the  roads  and  sys- 
tem of  roads  throughout  the  United  States  have  been 
and  now  are,  also,  as  a  whole,  unreasonably  high. 

5th.  That  the  exceptional  conditions  in  California 
which  must  largely  determine  what  would  be  just  and 
equitable  rates  for  the  railroads  to  charge  for  the  trans- 
portation of  persons  and  property  within  its  limits, 
having  respect  to  local  public  interests  and  those  of  the 
State  at  large,  are  diversified  and  complex  in  detail 
beyond  any  precedent.  The  most  exhaustive  and  com- 
prehensive investigation  of  those  conditions  must  be 
made,    involving     much     time    and    very   considerable 


43 

expense  to  satisfactorily  determine  llie  qiiestio]i  of  what 
would  be  just  and  equitable  rates  for  each  road  and  sys- 
tem of  roads  in  the  State,  so  exactly  as  (o  justify  any 
declaration  that  as  a  rule  those  now  existing  are  not  as 
just  and  equitable  as  practicable. 

The  general  tenor  of  this  report  has  necessarily  been 
conservative,  but  it  affords  me  pleasure  to  say  that  my 
inquiry  has  touched  the  clearances  of  the  San  Francisco 
Clearing  House,  the  resources  of  the  State  banks,  tlie 
assets  of  the  savings  banks,  the  value  of  exports  and 
imports,  including  grain  and  coal,  the  rapid  increase  in 
the  volume  of  the  various  products  of  the  State,  the  min- 
ing interests,  also  the  progress  in  building  and  general 
improvements. 

These  and  many  other  considerations  that  have    come 

to  my  notice    justify  and  confirm  the    congratulation   of 

President  C.  L.  Taylor  to  the  members  of   the   Chamber 

of  Commerce  of  San  Francisco,  in  his  report  of   January 

19th  last,  i.  e.,     "  We  may  congratulate  ourselves  upon  a 

season   of   reasonable  prosperity  and  progress   for   both 

city  and  State." 

(Signed)    Richard   Price   Morgan, 

of  Dwight,  Illinois. 
(Signed)    Dwight  C.  Morgan, 

Assistant  Engineer. 
San  Francisco,  November  14th,  1892. 


44 


APPENDIX. 

"A." 

Office  of  the  Board  of  Railroad  Commissioners. 

San  Francisco,  June  10th,  1892. 

Col.  R.  p.  Morgan, 

Palace  Hotel,  City. 

Dear  Sir:  Our  Board,  being  desirous  of  obtaining  the 
services  of  an  experienced  engineer  and  expert  in  rail- 
road matters,  and  learning  that  you  are  in  the  city,  I  am 
instructed  by  President  Rea  to  ascertain  whether  you  are 
open  to  make  an  engagement  with  the  Board,  to  investi- 
gate and  inform  us  particularly  with  reference  to  what 
would  be  just  and  equitable  rates  of  freights  and  fares, 
taking  into  account  operating  expenses  and  all  other 
matters  of  general  import  bearing  thereon  and  affecting 
the  operation  of  railroads  in  this  State. 

Kindly  inform  me  at  your  earliest  convenience 
whether  you  can  devote  sufficient  time  to  an  inquiry  of 
this  magnitude  to  enable  us  to  fully  advise  the  Commis- 
sion, who  are  desirous  that  such  a  report  be  made  as 
soon  as  possible. 

If  your  answer  to  the  foregoing  be  favorable,  please 
give  me  your  references,  terms,  etc. 

Respectfully  yours, 
(Signed)  Jas.  V.  Kelly, 

Secretary  State  Board  of  Railroad  Commr's. 


45 

Palace  Hotel,   S.  F.,  June  18th,  1892. 

James  V.  Kelly,   Esq., 

Secretary  Board  of  Railroad  Commissioners. 

Dear  Sir:  Replying  to  your  favor  of  the  16th  inst.,  I 
understand  from  it  that  the  Commission  desire  to  have 
a  report  made  upon  the  tariffs  of  charges  of  the  railway 
companies  of  California,  for  the  transportation  of  per- 
sons and  property,  i.  e.,  ''taking  into  account  operating 
expenses  and  all  other  matters  of  general  import  bearing 
thereon,  and  affecting  the  operation  of  railroads  in  this 
State."  The  question  is,  are  their  charges  unjust  and  in- 
equitable or  not?  And  if  they  ought  to  be  modified  to 
make  them  just  and  equitable,  in  what  respect  and  de- 
gree? 

To  accomplish  a  work  of  such  magnitude  and  impor- 
tance with  reasonable  accuracy,  as  promptly  as  you  de- 
sire, and  as  is  feasible,  all  the  aids  the  authority  of  the 
Commission  can  command,  and  that  the  railway  com- 
panies themselves  can  readily  give,  should  be  available. 

It  would  be  necessary  for  me  to  acquire,  by  personal 
observation  and  investigation,  additional  knowledge  of 
the  physical  conditions  affecting  each  road,  and  also  of 
the  resources,  present  and  prospective,  of  each. 

After  a  few  days  necessary  to  complete  a  report  I  am 
now  engaged  upon  for  European  capital,  I  shall  have 
the  time  at  my  disposal,  and,  so  far  as  I  may  be  able, 
will  prepare  a  report  upon  the  question,  if  the  Commis- 
sioners desire  it. 

My  terms  have  been  uniform  for  more  than  ten  years, 
and  are  not  unreasonably  high.  They  include  all  ex- 
penses necessary  to  acquire  and  prepare  the  data  essen- 
tial to  the  work  I  may  be  engaged  upon. 


46 

As  requested,  I  inclose  my  professional  letter,  which 
contains  the  testimony  of  some  third  parties  in  respect 
to  myself. 

Awaiting  your  furthur  pleasure,  I  remain, 
Respectfully  yours, 

(Signed)  Richard  P.  Morgan. 


Office  of  the  Board  of  Railroad  Commissioners. 
San  Francisco,  July  11,  1892. 

Resolved,  That  the  services  of  Col.  Richard  P.  Morgan 
be  and  hereby  are  engaged  by  this  Commission  for  the 
purposes  and  on  the  terms  stated  in  the  correspondence 
had  with  him  in  respect  thereto,  the  engagement  to 
take  effect  immediately;  and  the  President  and  Secretary 
of  the  Commission  are  hereby  instructed  to  put  Mr. 
Morgan  in  communication  by  letter  with  the  managers 
of  the  railroad  companies  of  California,  and  otherwise 
to  assist  him  in  every  practicable  way  to  obtain  any  data 
and  general  information  he  may  desire. 


"  B." 

Office  of  Railroad  Commission. 

San  Francisco,  July  13,  1892. 

J.  F.  BURGIN, 

President  S.  F.  &  N.  P.  Ry.,  San  Francisco,  Cal. 

Dear  Sir  :  Complying  with  the  instruction  of  the 
Board  of  Railway  Commissioners,  permit  me  to  intro- 
duce to  you  Mr.  Richard  P.  Morgan,  the  Civil  Engineer 
and  Railway  Expert,  whose   services  they  have  engaged 


47 

to  investigate  and  report  with  reference  to  what  would 
be  just  and  equitable  rates  of  freights  and  fares,  taking 
into  account  operating  expenses,  and  all  other  matters  of 
general  import  bearing  thereon  and  affecting  the  oper- 
ations of  the  railroads  in  this  State. 

Will  you  kindly  provide  Mr.  Morgan,  and  any  assist- 
ant accompanying  him,  with  transportation  on  your 
road,  also  with  such  information  in  respect  to  the  rates 
and  fares  charged  by  your  company,  its  operating  expen- 
ses, etc.,  as  he  may  desire,  and  oblige. 
Yours  respectfully, 

J.  V.  Kelly, 

Secretary. 


C." 


Southern  Pacific  Company, 

lanager. 

San  Francisco,  Sept.  6th,  1892. 


OFFICE  OF 
2nd  Vice-Pres.  &  General  Manager 


Col.  R.  p.  Morgan, 

Palace  Hotel,  City. 

Dear  Sir  :  Answering  yours  of  the  24th  ultimo, 
wherein  you  ask  "  what  lines  are  embraced  by  the  South- 
ern Pacific  System  in  this  State  (California),"  also  ap- 
proximately what,  "  in  my  opinion,  the  saving  in  the 
cost  of  operating  them  as  a  system  is,  instead  of  under 
separate  organizations  and  managements." 

The  following  list  embraces  the  roads  operated  by  the 
So.  Pac.  Co.  in  this  State,  37  in  number,  first  built  and 
operated  under  separate  organizations  and  manage- 
ments : 

Western  Pacific  Railroad. 

Central  Pacific  R.  R.  of  California. 


48 

California  &  Oregon  Railroad. 

S.  F.,  Oakland  &  Alameda  R.  R. 

San  Joaquin  Valley  R.  R. 

California  Pacific  R.  R. 

Napa  Valley  R.  R. 

Northern  California  R.  R. 

Northern  Railway. 

Woodland,  Capay  &  Clear  Lake  R.  R. 

West  Side  &  Mendocino  R.  R. 

Vaca  Valley  &  Clear  Lake  R.  R. 

San  Joaquin  &  Sierra  Nevada  R.  R. 

Sacramento  &  Placerville  R.  R. 

Santa  Rosa  &  Carquinez  R.  R. 

Amador  Branch  R.  R. 

Berkeley  Branch  R.  R. 

San  Francisco  &  San  Jose  R.  R. 

Southern  Pacific  Branch  R.  R. 

Los  Angeles  &  San  Pedro  R.  R. 

Southern  Pacific  R.  R. 

San  Jose  &  Almaden  R.  R. 

Pajaro  &  Santa  Cruz  R.  R. 

Monterey  Railroad. 

San  Pablo  &  Tulare  R.  R. 

San  Ramon  Valle}'^  R.  R. 

Stockton  &  Copperopolis  R.  R. 

Stockton  &  Tulare  R.  R. 

San  Joaquin  Valley  &  Yosemite  R.  R. 

Los  Angeles  &  San  Diego  R.  R. 

Los  Angeles  &  Independence  R.  R. 

Long  Beach,  Whittier  &  Los  Angeles  County  R.  R. 

Long  Beach  R.  R. 

Ramona  &  San  Bernardino  R.  R. 

Stockton  &  Visalia  R.  R. 

Santa  Cruz  &  Felton  R.  R. 

Bay  &  Coast  R.  R. 


49 

In  addition  to  these  lines  in  California,  and  exclusive 
of  the  Central  Pacific  road,  which  extends  eastward  to 
Ogden,  Utah,  the  following  roads,  14  in  number,  are 
operated  by  the  Southern  Pacific  Company  in  close  con- 
nection and  mutual  interchange  of  traffic  with  the  others 
to  their  common  advantage  : 

Oregon  &  California  R.  R. 

Oregonian  Railroad. 

Portland  &  Yamhill  R.  R. 

Southern  Pacific  of  Arizona. 

Southern  Pacific  of  New  Mexico. 

Galveston,  Harrisburg  &  San  Antonio  R.  R. 

Buffalo  Bayou,  Brazos  &  Colorado  River  R.  R. 

Gulf,  Western  Texas  &  Pacific  Railway. 

Louisiana  Western  R.  R. 

Morgan's  Louisiana  &  Texas  Railway. 

New  Orleans,  Opelousas  &  Great  Western  Railway. 

New  York,  Texas  &  Mexican  R.  R. 

Sabine  &  East  Texas  Railway, 
making  51  roads,  all  told,  operated  by  the  Southern  Pacific 
Company. 

Economies  are  effected  by  consolidating  these  proper- 
ties under  one  management,  by  dispensing  with  many 
executive  and  managing  officers  and  agencies  ;  by  en- 
forcing uniform  methods  for  maintenance  of  the  road 
and  equipment  ;  by  reducing  the  number  of  shops  and 
employing  men  of  greater  skill  in  the  supervision  of  the 
different  branches  of  the  service  than  can  be  commanded 
by  the  smaller  roads  ;  by  doing  business  with  the  mini- 
mum amount  of  rolling  stock,  sending  the  equipment 
from  one  road  in  its  dull  season  to  work  on  another  in 
its  busy  times,  while,  under  separate  organizations,  each 
little  road  must  be  equipped  to  take  care  of  itself  at  all 
seasons.     In  these    and  many  other  ways  the  operating 


50 

efficiency  of  a  number  of  small  roads  is  increased,  and  the 
expenses  reduced  by  combining  the  operations  under 
one  management. 

Without  taking  up  your  time  with  details  in  this  con- 
nection, I  can  hardly  do  better  than  to  refer  you  to  tables 
Nos.  1  and  2,  pages  89  and  90,  12th  annual  report  of  the 
Board  of  Railroad  Commissioners  of  California  for  the 
year  ending  November  1st,  1891.  The  tables,  though 
incomplete  through  lack  of  statistics  for  all  lines,  are, 
nevertheless,  valuable  and  instructive. 

Computing  from  the  data  in  table  No.  1,  we  find  that 
the  percentage  of  operating  expenses  to  gross  earnings 
is,  of  the  lines  operated  by  the  Southern  Pacific  Company, 
63.4  per  cent;  for  the  other  lines  in  California,  79  per  cent. 
The  average  rate  of  fare  per  passenger  per  mile  for  the 
Southern  Pacific  lines  is  2.15  cents  ;  for  the  other  lines 
the  average  indicated  by  the  table  is  close!}'-  in  the  neigh- 
borhood of  4  cents  per  passenger  per  mile.  The  aver- 
age freight  earning  per  ton  per  mile  for  the  Southern 
Pacific  Company's  lines  is  1.67  cents.  For  the  other 
lines  shown  on  the  table  (excepting  only  the  Atlantic  & 
Pacific  Railroad),  from  2.62  cents  per  mile  to  12  cents 
per  ton  per  mile,  the  average  of  which  must  be  much 
greater  than  the   Southern   Pacific  Company's  average. 

Your  investigation  will  doubtless  demonstrate  that 
many  of  the  other  companies  operated  independently  of 
the  Southern  Pacific  Company  show  a  deficit  from  the 
commencement  of  their  operations.  This,  coupled  with 
the  fact  that  all  of  them  are  maintaining  higher  rates 
than  the  average  for  the  Southern  Pacific  Company's 
lines,  and  use  a  greater  percentage  of  the  gross  earnings 
to  cover  their  necessary  operating  expenses  than  is  re- 
quired for  the  Southern  Pacific  Company's  lines,  I  take 
as  corroborating  my  opinion,  formed  after^careful  study 


51 

and  much  practical  experieuce  in  connection  with  these 
things,  viz:  that,  by  consolidating  interests,  as  has  been 
done  by  the  Southern  Pacific  Company,  the  railroads  are 
able  to  and  do  serve  the  people  better  when  grouped  to- 
gether and  operated  by  one  company  than  they  are  able 
to  do  standing  alone  by  themselves. 

Yours  trulv, 

A.  N.  TowNK. 


G." 


The  four  principal  counties  of  the  Sacramento  valley 
are  Yolo,  Colusa,  Butte  and  Tehama.  They  embrace  an 
area  of  8,547  square  miles,  or  5,500,000  acres.  This  area 
comprises  the  broad  agricultural  districts  of  the  Sacra- 
mento valley. 

In  these  counties  there  were,  in  1880,  71  holders  hav- 
ing 5,000  acres  and  upward,  and  the  aggregate  of  these 
71  holdings  was  797,761  acres.  In  1885  there  were  85 
holders  having  5,000  acres  and  upward,  and  the  aggre- 
gate of  their  holdings  was  1,130,484  acres.  In  1890  there 
were  106  holders  having  5.000  acres  and  upward,  and 
the  aggregate  was  1,479,104  acres.  The  increase  in  the 
aggregate  of  the  individual  holdings  of  5,000  acres  and 
upward  was  700,000  acres.  Thus,  there  had  fallen  into 
this  larger  class  700,000  additional  acres,  and  the  class 
itself  had  increased  from  71  to  106. 

When  the  observation  is  taken  by  selecting  the  50 
largest  holders  in  each  of  the  counties,  similar  results 
are  obtained,  the  most  remarkable  relating  to  Tehama 
count3\  In  1880  the  50  largest  holders  in  that  county 
held  264,435  acres;  in  1885  they  held  546,690  acres; 
in  1890  they  held  687,248  acres.     Aggregating  the  50  in 


52 


each  couuty,  that  is  to  say,  the  200  largest  holders  in  the 
four  counties,  and  the  aggregate  in  1880  was  1,162,635  ; 
in  1885  it  was  1,499,217  acres  ;  and  in  1890  it  was  1,781,- 
318  acres.  Witness  the  result  of  a  comparison  of  the 
largest  holdings :  In  1880  the  largest  holding  was 
31,167  acres  ;  in  1885  the  largest  holding  was  72,993 
acres  ;  and  in  1890  it  was  109,000  acres.  The  suggestion 
which  obtrudes  itself  is  this  :  Was  the  increase  of  aggre- 
gates already  given  due  to  the  increase  of  the  very 
largest  holdings  ?  The  answer  is  in  the  negative,  as  the 
following  table  will  show  : 


1880.— Acres. 


1885.— Acres, 


1890.— Acres. 


Twentieth  largest  holder 

Fortieth  largest  holder , 

Sixtieth  largest  holder 

Eightieth  largest  holder 

One  hundredth  largest  holder . 


4,602 

2,316 

1,413 

915 

640 


7,924 
4,500 
2,742 
1,920 
1,446 


8,482 
4,190 
2,932 
2,040 
1,521 


Thus,  following  down  the  list,  the  one  hundredth  largest 
holder  had  increased  his  holding  nearly  300  per  cent, 
while  the  twentieth  largest  holder  had  increased  his 
holding  but  90  per  cent. 

The  effect  of  this  upon  the  population  is  very  start- 
ling. Tehama  county  had  a  population  in  1880  of  9,301. 
The  natural  gain  in  ten  years  should  have  been  1,860. 
The  actual  gain,  as  shown  by  a  comparison  of  the  census 
reports  of  1890,  was  615,  of  which  Red  Bluff  gained  502 
and  the  town  of  Vina  139.  The  actual  loss  of  population 
in  the  county  was  1,245,  notwithstanding  the  apparent 
gain  of  615.  In  the  townships  of  Paskenta  and  Tehama, 
running  from  the  Sacramento  river  across  the  broadest 
area  of  agricultural  land  in  the  county,  the  actual  loss, 
as  shown  by  the  census,  was  1,790. 

To  pursue  the  statistical  facts,  however,  let  us  present 
an  aggregate  of  the  population  in  the  four  counties  as 


shown  by  the  census  of  1880  and  that  of  1890.  The 
four  distinctively  Sacramento  valley  counties  had  in 
1880  a  population  of  52,912;  in  1890  the  population  was 
55,179.  The  natural  increase  of  52,852  in  ten  years 
would  be  10,583;  the  increase  shown  by  the  census  was 
2,367.  There  was,  therefore,  in  the  rural  districts  of  the 
Sacramento  valley,  the  fairest  and  most  fertile  valley 
of  the  State  of  California,  an  actual  loss  of  population 
equal  to  7,534. 

These  facts  do  not  relate  to  a  remote  country.  The 
details  of  the  operation  are  under  our  immediate  obser- 
vation. The  process  and  the  reason  for  it  are  not  far  to 
seek.  In  the  first  instance,  large  land-holding  superin- 
duces absenteeism.  The  owner  of  10,000  acres  of  land 
derives  an  income  vvhich  affords  the  opportunity  for  the 
gratification  of  the  higher  wants  of  his  nature.  The 
country  which  his  large  holding  has  made  desolate  of 
churches,  school-houses  and  society  affords  no  opportu- 
nity for  the  gratification  of  wants  called  into  being  by 
opportunity.  Hence,  the  family  resides  in  the  city.  The 
small  holder  on  the  margin  of  the  greater  has  no  neigh- 
bors in  one  direction,  except  the  very  few  undesirable 
farm  laborers,  comprising  chiefly  tramps  and  Chinamen, 
and  his  growing  family  demands  at  his  hands  educational 
opportunities  and  higher  social  enjoyment.  He  declares 
that  he  is  ready  to  sell  rather  than  submit  to  this  isola- 
tion. With  each  sale  the  unfavorable  condition  is  in- 
tensified, and  thus  the  land  becomes  cheaper  as  tlie 
social  condition  attending  its  ownership  becomes  more 
undesirable. 

During  the  last  year,  a  citizen  of  Butte  named  John 
Crouch  purchased  of  one  Bowers  2,100  acres  of  land,  ad- 
joining the  large  ownership  of  Mr.  Crouch.  Upon  the 
land  purchased  there  stood  a  beautiful  brick  residence, 


54 

which  had  cost  Bowers  $15,000.  He  is  a  social  being, 
entertaining  the  belief  that  some  embellishment  might 
attend  life  in  the  country;  that  some  of  the  exaltations 
of  civilization  might  be  enjoyed  even  in  the  rural  dis- 
trict. But  his  neighbors  were  few,  and  he  sold  to  his 
nearest  neighbor  and  largest  holder.  Immediately  upon 
obtaining  possession  of  the  land  John  Crouch  destroyed 
that  brick  house,  because  the  land  was  assessed  at  an  ad- 
ditional sum  in  consequence  of  the  improvement.  He 
used  some  of  the  doors  and  windows  for  the  construction 
of  a  shanty  in  which  to  entertain  the  men  who  would 
cultivate  that  broad  area  to  wheat,  and  which  the  as- 
sessor would  not  value  very  high  as  improvements. 

In  Paskenta  township  there  stands  the  remains  of 
twelve  houses  and  barns,  untenanted  because  the  owners 
of  the  land  surrounding  them  have  yielded  to  the  inevit- 
able, sold  out  and  left  the  country.  They  fell  victims  to 
the  extension  of  land  monopoly  in  this  State,  one  at  a 
time.  Some  yielded  reluctantly,  for  they  were  content 
with  their  homes.  But  these  homes  had  become  her- 
mitages, and  their  families  were  being  deprived  of  all 
social  enjoyments,  religious  privileges  and  educational 
advantages.  In  the  Colusa  Sun  of  December  15th,  1891, 
is  the  following  : 

"  That  portion  of  the  county  on  the  east  side  of  the 
"  river,  with  Butte  county  as  the  business  center,  is  un- 
"  surpassed  in  fertility  by  any  spot  on  earth.  Land  is 
"  intrinsically  worth  from  $60  to  $75  an  acre  for  the  pro- 
"  duction  of  wheat  alone.  The  large  land-owner  is  its 
"  only  drawback.  Nearly  the  whole  of  the  river  front 
"  land,  and  for  a  distance  of  five  miles  back  on  the  west 
"  side  of  the  river,  belongs  to  the  Glenn  estate,  to  the 
''  Chambers  Brothers  of  St.  Louis  and  other  large  land- 
* '  holders.     We  believe  that  there  is  not  a  single  child  of 


5& 

"  school  age  belonging  to  the  land  on  this  entire  district 
"of  255  square  miles.     The  soil  is  unsurpassed." 

In  a  small  tenement,  of  which  mention  was  made  in  a 
recent  publication,  in  the  city  of  New  York,  there  were 
56  families,  with  68  children  under  two  years  of  age. 

As  has  already  been  noted,  the  entire  gain  in  the  four 
counties,  as  shown  by  the  census,  was  2,367.  Of  these, 
five  towns  in  Colusa  countj'  gained  1,116,  one  town  in 
Yolo  county  gained  918,  two  towns  in  Tehama  county 
gained  641,  and  two  towns  in  Butte  county  gained  810. 
Here,  then,  in  five  or  six  towns  of  the  counties,  there  is 
a  gain  of  336  in  excess  of  the  entire  gain  of  the  district  ; 
and  to  this  must  be  added  the  gain  of  villages  not  noted. 
The  effect  of  this  upon  the  commercial  and  industrial 
activities  of  the  State  is  very  far-reaching.  When  a 
single  individual  owns  100,000  acres,  he  enjoys  the 
source  of  wealth  derived  from  that  vast  area.  At  the  end 
of  a  year,  when  the  product  of  a  region  so  vast  is  dis- 
tributed back  to  the  producer,  the  owner  receives  prac- 
tically all,  for  what  is  paid  to  the  farm  laborer  barely 
affords  to  him  a  subsistence.  There  is  a  single  family 
capable  of  gratifying  the  higher  desires  of  civilized  life 
from  the  cultivation  of  land.  In  the  entire  Sacramento 
valley,  the  100  largest  holdings  embrace  1,654,000  acres 
of  land.  Ninety  per  cent  of  it  at  least  is  capable  of  sup- 
porting a  famil}^  on  each  100  acres,  or  employing  the  in- 
dustry of  a  single  agricultural  cultivator  with  the  assist- 
ance of  his  family  on  each  50  acres.  Take  the  larger 
figure,  however,  and  100  holders  in  the  Sacramento 
valley  have  16,540  farms  of  100  acres  each.  The  pro- 
prietorship of  100  acres  of  fertile  land,  under  favoring 
climatic  possibilities,  would  give  to  these  100  holdings 
16,540  families.  The  urban  population  demanded  by 
these   would  be   more   than  double  that  number.     Thus 


56 

32,000  families  are  displaced  in  the  Sacramento  valley 
by  the  holdings  of  100  men.  But  excluding  these  100 
largest  holders  in  the  valley,  the  next  200  below  them 
own  a  still  greater  quantity.  Thus  300  men  usurp  the 
opportunity  for  subsistence  of  at  least  64,000  families. 
They  displace  civilization.  They  force  the  population 
into  the  cities,  or  offer  the  choice  of  emigration. 
Traveling  through  the  region  in  question,  the  observer 
is  struck  with  the  great  disparity  between  its  fertile 
attractiveness  and  the  infrequency  of  human  habitation. 
The  influence  of  all  this  on  the  agricultural  laborer  is 
most  degrading.  He  does  not  become  a  landed  propri- 
etor ;  that  hope  is  denied  to  him  forever. 

The  question  will  naturally  be  asked  whether  the  ten- 
dency observed  in  the  Sacramento  valley  is  common 
throughout  the  State.  My  observation  has  extended  to 
most  of  the  counties  of  California.  Let  us  take  for 
illustration  one  of  the  most  progressive  counties  in  the 
San  Joaquin  valley,  the  county  of  Fresno.  In  1875 
there  were  44  holdings  of  5,000  acres  and  upward,  ag- 
gregating 847,379  acres.  In  1880  there  Avere  50  holdings 
of  5,000  acres  and  upwards,  aggregating  995,577  acres. 
In  1885  there  were  48  holdings  of  5,000  acres  and  up- 
ward, and  they  aggregated  1,061,955  acres.  In  1890 
there  were  41  holdings  of  5,000  acres  and  upward,  and 
the  aggregate  was  943,557  acres.  The  largest  land-hold- 
ing in  this  county  had  increased  from  169,464  acres  in 
1875  to  239,486  acres  in  1890.  Here  a  single  firm  of 
land-holders  has  added  70,000  acres  of  land  to  their  al- 
ready large  holding.  The  same  firm  held  in  Merced 
county,  in  1880,  200,386  acres,  and,  in  1890,  223,232 
acres.  Thus,  in  Fresno  and  Merced  counties,  this  single 
firm  now  owns  462,718  acres. 


57 

The  student  of  the  statistics  will  be  struck  witli  one 
fact  everywhere  apparent,  to  wit  :  the  land  held  by  the 
estates  is  not  divided  up.  There  is  but  one  single  in- 
stance in  the  Sacramento  valley  where  the  amount  of 
land  set  down  opposite  the  holder  decreases  when  the 
holding  passes  to  the  ownership  of  an  estate  ;  that  in- 
stance relates  to  the  holding  of  Hugh  J.  Glenn.  In  1880, 
Mr.  Glenn  being  alive,  he  appeared  on  the  assessment 
roll  as  the  owner  of  58,000  acres  of  land.  In  1890  the 
estate  of  Hugh  J.  Glenn  appears  for  42,000  acres.  This 
decrease  was  due  wholly  to  the  fact  that  Mr.  Glenn  died, 
leaving  his  estate  heavily  encumbered  by  debt,  and  a  por- 
tion had  to  be  sold.  There  has  been  no  sale  of  any  land 
since  the  debts  of  the  estate  have  been  adjusted.  In 
other  instances,  where  the  individual  appeared  first  on 
the  assessment  roll  and  subsequently  the  same  land  is 
assessed  to  his  estate,  the  holdings  increased  in  the  same 
ratio  with  private  holdings.  The  instances  of  this  are 
frequent.  A  large  holding  already  cited,  relating  to 
Fresno,  will  serve  as  an  illustration.  The  holding  is  that 
of  Miller  &  Lux.  In  1875  Miller  &  Lux  appeared  on  the 
assessment  roll  for  169,464  acres.  This  holding  rises 
steadily  notwithstanding  the  death  of  one  of  the  part- 
ners, until  upon  the  assessment  roll  of  last  year  the  firin 
of  Miller  &  Lux  appears  for  239,480  acres.  Like  in- 
stances of  this  are  found  in  Sacramento,  Butte,  Yolo, 
Colusa  and  other  counties  of  the  State. 

The  question  arises  as  to  the  details  by  which  this 
aggregation  has  been  achieved.  Again  the  answer  is 
not  far  to  seek.  It  was  through  the  facility  with  which 
land  may  be  made  the  basis  of  security  for  the  repay- 
ment of  money  borrowed.  If  you  have  followed  the  sta- 
tistics you  will  observe  that  the  increase  of  the  holdings 
made  the  greatest  progress  between  1883  and  1890.     Tiie 


58 

aggregate  amount  of  the  mortgages  found  on  the  assess- 
ment roll  in  1882  was  $82,953,826.  In  1890  the  amount 
had  increased  to  $168,097,325.  This,  of  course,  included 
the  mortgages  upon  city  and  count}-^  real  estate;  but  a 
still  more  remarkable  fact  remains  to  be  noted.  In  1882, 
when  the  volume  of  mortgages  reached  $83,000,000,  the 
value  of  the  property  mortgaged  was  set  down  at 
$446,319,940.  In  1890,  when  the  value  of  the  mortgages 
had  reached  $168,097,325,  the  value  of  the  property 
affected  by  mortgages  was  set  down  at  $200,000,000. 
Thus  the  value  of  the  equity  of  redemption  had  in- 
creased, from  1882  to  1890,  $246,000,000.  A  mortgage  is 
treated  as  an  interest  in  land  affected  thereby.  The 
value  of  the  mortgage  is  assessed  to  the  mortgagee,  and 
the  value  of  the  land  to  the  owner  thereof.  In  1882  the 
full  valuation  of  the  land  was  given  in  to  the  assessor, 
but  eventually  the  owner  of  the  mortgaged  real  estate 
had  learned  the  art  of  narrowing  the  margin  between 
the  value  of  the  mortgage  and  the  value  of  the  land 
affected  thereby;  and  hence,  whereas  in  1882  about 
$83,000,000  of  the  mortgages  affected  $446,000,000  worth 
of  real  estate,  in  1890  $168,000,000  of  mortgages  affected 
only  $200,000,000  of  real  estate.  The  facility,  therefore, 
with  which  land  may  be  used  as  the  basis  of  security  at 
a  low  rate  of  interest  is  the  actual  lever  by  which 
countries  are  depopulated  and  monopoly  of  the  soil  is 
effected.  As  the  land  is  monopolized,  the  value  of  the 
improvements  declines. 

An  appeal  again  to  the  actual  statistics  in  this  State 
will  establish  this  fact.  During  the  period  of  the  great- 
est progress  in  the  direction  of  aggregating  lands  in 
California,  to  wit  :  From  1883  to  1890,  the  value  of  the 
country  real  estate  arose  from  $231,000,000  to  $388,440,000 
and    the    improvements    thereon    from    $37,000,000  to 


59 

$53,000,000,  an  increase  in  round  numbers  of  $16,000,000. 
In  the  same  period  of  seven  years,  the  value  of  the  city 
real  estate  arose  from  $183,000,000  to  $295,000,000,  and 
the  value  of  the  improvements  from  $100,000,000  to 
$153,000,000.  Thus,  while  the  improvements  on  $231, 
000,000  worth  of  real  estate  in  the  country  increased 
but  $16,000,000,  the  increase  on  the  city  real  estate  as- 
sessed at  $183,000,000  was  $52,000,000,  or  more  than  three 
times  the  aggregate  amount,  and  more  than  40  per  cent 
on  the  increased  value  of  improvements  on  country  prop- 
erty. If  the  improvements  on  the  country  realty  had 
kept  pace  with  those  on  the  city  real  estate,  at  the  end  of 
the  period  of  seven  years  we  reach  an  astonishing  dis- 
proportion between  the  value  of  the  improvements  on 
country  real  estate  and  that  observed  in  the  cities.  The 
figures  are  as  follows  :  The  value  of  the  country  prop- 
erty in  1890  was  $388,440,000,  improvements  thereon 
$53,951,000.  Value  of  city  real  estate,  $295,229,000  ; 
improvements  on  the  same,  $153,000,000.  The  relation 
of  the  value  of  improvements  on  country  property  to  the 
whole  value  of  the  property  is  but  14  per  cent,  while  the 
improvements  on  city  real  estate  is  approximately  52  per 
cent  of  the  value  of  the  real  estate. 

For  a  long  time  both  population  and  wealth  have  been 
congested  in  the  cities  and  towns.  Absentee  landlordism 
impoverishes  a  country.  The  money  distributed  back 
from  the  products  of  the  land  goes  chiefly  to  a  single 
family.  That  family  resides  in  the  nearest  town  if  the 
holding  aggregates  three  or  four  thousand  acres  ;  in  the 
nearest  city  if  the  holding  aggregates  from  5,000  to  10,000 
acres ;  in  the  metropolis  of  the  nation  if  the  holding 
reaches  50,000  or  100,000  acres.  Some  of  our  largest 
holders  reside  in  the  cities  of  New  York  and  Washington. 
These  are  men  holding  from  50,000  to  200,000  acres.  A 
still  larger  number  reside  in  San  Francisco,  the  metrop- 


60 

olis  of  the  coast.  These  hold  from  10,000  to  40,000  or 
50,000  acres.  The  annual  wage  bill  of  agriculture  is 
paid  to  a  labor  which  is  not  in  any  respect  attached  to 
tlie  soil  or  identified  with  the  country.  As  soon,  there- 
fore, as  the  crop  is  made  and  the  money  obtained  from 
its  sale  distributed  back  to  the  laborer  and  to  the  owner, 
the  former  disappears  to  the  villages  and  towns,  where 
his  only  savings  bank  is  the  saloon  ;  the  latter  deposits 
his  surplus  in  the  banks  to  use  it  for  the  purchase  of 
more  land,  and  his  family  spends  its  money  in  the  city. 
Thus  it  is  that  the  rural  districts  are  impoverished  while 
the  great  commercial  cities  are  overcrowded. 

In  the  instances  cited  herein  more  than  all  the  actual 
increase  of  the  population  of  the  Sacramento  valley  is 
attributable  to  its  towns.  There  is  a  still  greater  disparity 
between  the  accumulation  of  wealth  between  the  rural  and 
the  virban  populations.  In  the  15  Southern  States  of  the 
Union,  there  was  in  1889  deposited  in  the  national 
banks  $158,000,000.  In  the  city  of  New  York  alone 
the  deposit  in  these  banks  amounted  to  $418,000,000,  and 
yet  the  15  States  mentioned  produce  a  single  agricultural 
article  which  yields  an  income  of  $300,000,000  per 
annum.  The  wealth  is  not  accumulated  in  the  country. 
It  is  only  created  there.  This  tendenc}'^  carried  to  its 
ultimate  results — results  which  are  plainly  inevitable — 
will  eventually  evolve  three  general  classes  of  citizens: 
the  lowest,  the  agricultural  laborer;  the  middle  class, 
those  engaged  in  commerce;  and  the  highest  and  most 
influential,  the  land-holding  class.  Free  institutions 
like  ours  depend  for  their  perpetuity  upon  the  indepen- 
dence, self-reliance  and  virtue  of  its  citizenship.  A  sys- 
tem which  is  overcrowding  the  cities,  depopulating  the 
interior,  eliminating  the  class  heretofore  existing  of 
independent  small  holders,  is  fraught  with  danger  to  the 
perpetuity  of  republican  institutions. 


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APPENDIX     E 

-    PAGE   1. 

1 

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IN     OTHER      STATES 

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IN    CALIFORNIA    WITH    THOSE 

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APPENDIX      E    -  PAGE    II 


•    North    Pacific    Coast 

■  5an  rrancisco  »"•'  North   Paaf: 

■  Southern  PaciFic. 


Nevada  -  CaliFornla  *«'  Oreqoi 
Carson   anrf  Colorado . 
Union    Pacrfic 


Nor  Sca/e         25    Miles      =   /   Inch 

Vert  "         eOOO   Feet      =    / 


iSL 


CALIFORNIA    COUNTIES    COMPARED,    1810    AND     1830. 


PTiDdiwl  Induitrin 


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Agric'ullure.  DsiiTing,  Poultry.  Stock,  ^'";^J^^,,, 


r 


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OOMPABISON  OF  GLASS  RATES 
Ih  BwwmcT  OH  8.  P.  Go's  Lnm  tn  Calh^kdia  wrnt  Ratss  iw  Brrscr  wituix  nn  State 
DUTAHOU  ox  FoLLowwc  Lisiui    C  B.  &  (t-  R.  R..  C  M-  &  St.  K  »»..  c  R.  1 
C   &   N*.    W.   Rv.  AlTD   IlXtKOU  CoUMlutOKKU'  MAXIMUM  ItATKft. 


H-6. 
COMPARISON  C     ■ 

In  BWBCT  OX  &  P.  Co"f  Lnna  nt  CkuniK.-viA  iTkav. 


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!  State  op  Illinois  for  Similar  DistaN' 


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COMPARISON  OF  GLASS  RATES 
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^T.  Lines:    C-  B.  it  Q.  R,  R..  c.  M 
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UNIVERSITY  OF  CALIFORNIA  AT  LOS  ANGELES 

THE  UNIVERSITY  LIBRARY 
This  book  is  DUE  on  the  last  date  stamped  below 


OCT  14  193^ 
1PR2  5  195S, 

''"G     7 1961 


Form  L-9 

20  ?ll-l, '42(8519) 


AT 

IiOS  ANGELES 

UBRARY 


HE 

1853 

C2M8 


.■tRv-  •   or  c  A 


re  A.   rrjR.^i  ^,jj  an.,ElES 


L  008  296  153  3 


UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 

nil  III  mil  III  I  111  III  mil  III  III  II I II II 


AA   001  021  r 


Pi^f'Ar-:yyf^tft'!-:L^ii^j-3\a'r:c*i>^^>*^^:fij^'f'<^t^ 


